We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
More View more
Real Time News
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Gold: 0.56% Silver: 0.39% Oil - US Crude: 0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/nGk6siLuAj
  • #Gold prices have responded to key support with the recent recovery now targeting the first resistance target at 1472- look for a reaction here. Get your $XAUUSD technical analysis from @MBForex here: https://t.co/DOaEk7zMub https://t.co/psZR1kviqk
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.57%, while traders in France 40 are at opposite extremes with 84.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/MicO4pBhXR
  • Banxico: - Core inflation running persistently high $MXN
  • $USDJPY drops as Financial Times reports that China continues to delay truce with US in struggle to close phase-one trade deal https://t.co/Nm2LnUSyRx
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: France 40: 0.01% Germany 30: -0.10% US 500: -0.14% Wall Street: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/MLZRHQnmWc
  • Fed's Bullard: - Review of policy is evolution, not revolution $DXY $SPX
  • RT @Scutty: Global Debt Surges Above $250 Trillion as U.S., China Lead Way https://t.co/Lgr5sUSGQx
  • RT @LiveSquawk: Fed's Bullard: Fed Can Reconsider Whether To "Take Back" Recent Insurance Cuts If And When Businesses Adjust To New Trade L…
  • Fed's Bullard: - Baseline case for 2% growth is holding $SPX $DXY
Dow Jones Forecast: Boeing's Earnings Could Spell Disaster for the Average

Dow Jones Forecast: Boeing's Earnings Could Spell Disaster for the Average

2019-10-22 20:36:00
Peter Hanks, Junior Analyst

Dow Jones Forecast:

Dow Jones Forecast: Boeing’s Earnings Could Spell Disaster for the Average

The Dow Jones Industrial Average has lagged its S&P 500 counterpart recently as the Index’s largest constituent, Boeing, falls under continued pressure from the 737 Max debacle. The model, which suffered from a crippling issue that caused the downing of at least one commercial flight, has yet to return to service. Now, Wall Street analysts can no longer defend the corporation’s valuation as the issue begins to weigh on future orders and airlines seek compensation.

Dow Jones Price Chart Technical Outlook

Earnings Season: Key Facts to Know & Why it is Important for the Stock Market Outlook

Consequently, analysts have begun to cut price targets for the airplane manufacturer and shares have responded accordingly. In turn, the stock’s influence over the Dow Jones has slipped, with BA shares accounting for just 8.7% of the Index, down from more than 12% a year ago. Nevertheless, Boeing is still the Average’s highest weighted component and is therefore afforded noteworthy price influence.

Boeing Price Chart: Daily Time Frame (January 2018 – October 2019) (Chart 2)

Boeing BA Price Chart Technical Analysis Earnings Preview

Chart created with TradingView

Therefore, an abysmal quarter from the Chicago-based company could materially threaten the Index’s rally. While the initial reaction to the 737 Max problems was somewhat muted due to the company’s moat and competitive advantage, scandals, costs and lawsuits have continued to mount. If those are reflected in the report, further losses could be expected. Evidently, investors are apprehensive going into the report with the stock’s implied volatility resting at 5.4% - slightly higher than is typically expected from a mega-cap industrial manufacturer.

Boeing Earnings BA Implied Move

Source: Bloomberg

Conversely, Caterpillar (CAT) is a heavy-equipment manufacturer with a relatively stable background compared to Boeing, but demand has come into question. Viewed as a barometer of global growth by some, Caterpillar offers important insight on the heavy-machinery demand from different geographical regions. Thus, a drawdown in demand in an emerging market like China could exacerbate global growth fears – fears that have been responsible for various instances of risk aversion in recent months.

Caterpillar Price Chart: Daily Time Frame (November 2017 – October 2019) (Chart 3)

CAT Catepillar Price Chart Technical Outlook Earnings Preview

Chart created with TradingView

Regardless of direction, both stocks have been afforded the ability to significantly impact the Dow Jones. Judging by the earnings released on Tuesday afternoon from Snapchat and Texas Instruments, the Industrial Average may wake up with a hangover that the industrials could look to cure if they impress. As it stands, however, the odds seem to be stacked against such an outcome. For more earnings season trades and forecasts, follow @PeterHanksFX on Twitter.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:Can Earnings Propel the Dow Jones and Nasdaq 100 to New Heights?

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.