The Dow Jones Industrial Average declined 1.3% Wednesday, undercutting the 40,000 level as well as short-term technical support. Earnings news will play a key role in whether the index drops to test its 50-day moving average on Thursday, as the Dow nears the halfway point in its second-quarter earnings season.
Dow component IBM traded sharply higher early Thursday on second-quarter results. Fellow Dow stocks Honeywell and chemical leader Dow dragged at the bottom of the index after their financial reports.
IBM reported Wednesday better-than-expected second-quarter earnings and revenue while also increasing its free cash flow guidance. Meanwhile, Honeywell beat forecasts but cut its earnings guidance. Dow, the chemical and plastics leader, saw earnings and revenue underperform analyst projections.
IBM stock advanced 3.2% during premarket action on Thursday. Dow stock declined 4.8% while Honeywell shares angled down 4.3%.
Dow futures leaned higher just ahead of Thursday starting bell. The question of the day is whether the index will hold short-term support around its 21-day exponential moving average, or will it dive further to test support at its 50-day line?
Busy Upcoming Week For Dow Jones Stocks
The Dow Jones decline comes ahead of major week for index component earnings. Apple and Microsoft top the Dow's earnings calendar as July rolls into August. By the end of next week, more than 50% of Dow Jones industrial average companies will have reported financials.
Microsoft reports late Tuesday. Apple delivers results after Thursday's close.
Along with Apple and Microsoft, Dow Jones components Chevron, Boeing, Merck, Intel, McDonald's and Procter & Gamble report next week.
The Magnificent Seven suffered its worst one-day loss on Wednesday since October 2022. Analyst consensus sees Microsoft booking a slowdown in earnings growth, while its revenue increase continues apace. Apple's EPS and revenue are projected to accelerate modestly, beginning what analysts project as several periods of improvement.
Apple stock sold off 2.9% Wednesday, falling below its 21-day exponential moving average, a short-term support level. The stock is still extended past a 199.62 cup-base buy point. Apple shares dipped 0.1% before the market opened on Thursday.
Microsoft stock slipped 3.6% Wednesday, giving up its flat base's 430.82 buy point as it gives up support around the 50-day line. Early Thursday, shares added 0.3%.
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