The Dow Jones Index futures slipped on Monday as concerns about the rising US-Iran tensions rose. They dropped by over 300 points to $49,185, down from last week’s close of $49,445. This article provides a forecast on what to expect as corporate earnings rise.
Dow Jones Index futures drop as geopolitical risks rise
The blue-chip Dow Jones Index jumped to a record high after Iran announced the reopening of the Strait of Hormuz where 20% of all crude oil passes. President Donald Trump touted the deal in a series of social media posts and in a campaign-style rally in Arizona.
In his statements, Trump maintained that the agreement did not include the issue on Lebanon, where Israel has continued its bombardment. He also noted that the deal meant that the blockade on Iranian ports would continue, a position that Iran rejected.
As a result, Iran announced that it had closed the Strait on Saturday, a major blow to Trump, who sees its reopening as a major priority. In a post, Trump said that the US would send a delegation to Pakistan for talks.
At the same time, the US military started boarding Iranian ships as Trump had hinted last week. As a result, traders on Polymarket are betting that fighting may resume once the ceasefire ends. In his statement on Sunday, Trump reiterated that bombing Iranian bridges and power plants was still in play.
Still, on the positive side, market participants have largely moving past the ongoing Iran war, meaning that its impact on the Dow Jones and other indices will be less in the future. A good example of this is the Russian war with Ukraine, where stocks dropped and then rebounded as investors embraced the new normal.
Corporate earnings to accelerate
Another reason why the Dow Jones Index may rebound in the near term is that corporate earnings are doing well. Last week, 10% of all companies in the S&P 500 Index published their numbers, with most of them publishing stronger-than-expected results.
A report by FactSet estimates that the average earnings growth in the first quarter is 13%. Historically, the real number is usually much better than the estimates by about 7 points, meaning that earnings growth will be the best in years.
This earnings growth is important because it is happening at a difficult time for the economy as Trump’s tariffs bite and growth slows. The most recent report showed that the American economy barely grew in the fourth quarter of last year.
Hundreds of companies in the S&P 500 Index, including some in the Dow Jones will publish their numbers this week. Some of the most notable companies that will release their numbers this week are GE Aerospace, UnitedHealth, RTX, and Intuitive Surgical.
On Wednesday, companies like Tesla, Lam Research, IBM, Texas Instruments, AT&T, and Boeing will release their numbers. The other top companies to publish their earnings this week are Caterpillar, American Express, Intel, Thermo Fisher, and Blackstone.
Dow Jones Index Futures technical analysis
Dow Jones chart | Source: TradingView
The daily chart shows that the Dow Jones futures have continued rising in the past few weeks, moving from a low of $45,057 in April to a high of $49,883 on Friday. It then pulled back slightly after the weekend developments.
The index remains in a bull run and is still above the 50-day and 100-day Exponential Moving Averages (EMA). Also, the Aroon Oscillator has moved to the overbought level.
Therefore, the most likely scenario is where the index continues rising, with the next key target being the all-time high of $50,555, which is about 2.50% above the current level.
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