Dow Jones (DJIA) Forecast for 2023, 2024-2025 and Beyond | Litefinance

2023.09.19 2023.09.19
Dow Jones Forecast for 2023 and Beyond

Jana Kanehttps://www.litefinance.org/blog/authors/jana-kane/

Dow Jones (US30, YM) — Dow Jones Industrial Average, DJIA. Its price reflects the average cost of 30 companies from various sectors listed on the NYSE (New York Stock Exchange). Dow Jones comprises the largest US corporations, such as Apple, Walt Disney, Walmart, Nike, McDonald’s, Microsoft, Coca-Cola, and others.

This Dow Jones forecast article will discuss the Dow Jones Stock Index and its past performance, factors that can affect the DJI, what experts have to say, and prediction charts. We will also try to answer what a trader can do in this difficult time for investing.

About the Dow Jones Stock Index

The Dow Jones index (Dow Jones) is an American stock index with a leading market position. It was created in 1896 by Charles Dow and Edward Jones, the founders of the famous financial media agency Dow Jones & Company and the first publishers of the Wall Street Journal.

Originally, the Dow Jones index consisted only of industrial companies, but this is no longer true. Of the original 12 companies, only General Electric still exists, but it was also removed in 2018. Procter & Gamble, included in the Dow since 1932, is the oldest company of the Dow Jones index.

The index’s initial cost was $40.94, the average of the prices of 12 shares back then. In 1916, the index was expanded to 20 stocks. Since 1928, the Dow has included 30 publicly listed companies, that is why it is also called “Dow 30”.

You can buy Dow Jones from S&P Dow Jones Indices LLC, just like other popular indexes, including the S&P 500. The product code of the Dow Jones Index is #YM on the CME stock exchange.

It’s worth noting that the Dow Jones is a price-weighted index, in contrast to, for example, the AEX. That means that an expensive stock can greatly impact the index’s overall movement. In other words, not every company is equally important and counts equally for the stand of the fair, which provides a good picture of the financial situation in America.

The calculation of the final price of the index is quite complicated, given stock splits and dividends. The average is divided by the Dow Divisor, which maintains the index’s accuracy. The Dow Divisor is regularly updated, affecting the Dow Jones forecast.

Dow Jones index price today

Today, the Dow Jones Industrial Average (#YM) is traded at $34 466.6.

Dow Jones real-time price chart with current buy and sell rates:

Factors That Can Impact the Dow Jones Stock Price

A stock index is a difficult instrument for forecasting as it comprises various stocks. The price of stocks is subject to specific factors inherent in specific economic sectors. However, we can single out a few factors that affect the index as a whole.

1. Current news

The price of the Dow Jones in the stock market is formed based on the information on the included companies. That is why it is important to keep a close eye on all the major news and financial performance of the companies that weigh the most in this reference index.

2. US Economic Data

Economic data published by US officials also play an important role in the index’s price formation. These figures include unemployment rate, trade balance, GDP growth rate, inflation data, retail sales, durable goods, industrial orders, business sentiment, and consumer confidence.

3. US Dollar Exchange Rate

The value of the US dollar against other currencies affects the export or import profitability of US-listed companies, so it also affects the Dow Jones index. If the US dollar goes down, the stock index’s cost can drop, too.

4. US Federal Reserve Communications

The US Federal Reserve’s rate decisions and press conferences also impact the value of the Dow Jones index stocks.

Dow Jones Predictions by Experts

As the DJIA index is highly volatile, experts make forecasts with caution. The stock market is often subject to sharp moves. Besides, it still reacts to the aftermath of the coronavirus pandemic. Let’s have a closer look at some expert predictions.

1. Moneycorp

The Moneycorp portal based its Dow Jones forecast for 2023 on the analysis of current trends, economic indicators, and global events. They estimate the US30 rate can reach 38,000 points by the end of the year unless a serious crisis breaks out. At the same time, the experts mentioned the index’s dependence on the US Fed’s policy, future presidential elections, recession fears, etc.

2. Bloomberg

Bloomberg’s data are based on expert opinions, surveys, statistical models and past performance. According to their stock market forecast, the US30 rate can rise to 40,000 points by the end of 2023, if the US economy continues recovering from post-pandemic consequences and corporate profits grow. The experts also say that the index price can vary from 32,000 to 48,000 points.

3. S&P Global

S&P Global’s predictions account for fundamental factors, such as GDP growth rate, inflation, unemployment, interest rate hikes, etc. According to their stock market forecast, the index could reach 36,000 by the end of 2023 if the US economy continues to accelerate and the Federal Reserve cuts its stimulus. While analyzing the Dow Jones index’s prospects, the experts also consider COVID-19-related risks, geopolitical tensions, and etc.

4. Moody’s

Moody’s analyses credit ratings of countries, corporations, municipal corporations, etc. The experts assume that the US30 rate can reach 34,000 points by the end of 2023 if financial markets undergo successful reforms. They also predict that the index may face a negative effect of the large government debt, low productivity, and social inequality in the US.

5. Thomson Reuters

Thomson Reuters experts base their analysis on news, opinions, and forecasts from varied sources, including analysts, central banks, etc. According to their stock market forecast, the US30 index can go up to 37,000 points by the end of 2023 if the US government officials keep a stable economic development pace and tame inflation. The analysts also mention eventual risks related to political uncertainty, consumer confidence, and trade conflicts.

6. Morningstar 

Morningstar evaluates the investment potential of the stocks included in the DJIA. Analysts predict the US30 index at 35,000 points by the end of 2023 if the companies show good financial performance and the stock market remains attractive to investors.

7. Trading Central

The Trading Central website bases its forecasts on technical analysis and various indicators, such as moving averages, support and resistance levels, trend lines, etc.

They assume the DJI could reach 39,000 points by the end of 2023 if it continues to move in the ascending channel that dates back to March 2020.

8. Finam

When making a forecast, Finam experts consider fundamental data and macroeconomic indicators. They expect the US30 to reach 33,000 points by the end of 2023 if the US economy slows amid high inflation, higher interest rates, and weaker consumer demand. They also consider the impact of the US and global political situation on the financial market.

9. Investing.com

Investing publishes analysts’ average opinions. They presume the YM rate in the stock market could reach 38,500 points by the end of 2023 if the US economy grows stably and corporate profits come in above expectations. They also outlined the range of possible US30 prices, from 31,000 to 46,000 points.

10. TradingView

TradingView forecasts are based on technical analysis and various indicators, such as moving averages, support and resistance levels, trend lines, etc. They assume the DJI rate could reach 41,000 points by the end of 2023 if it continues to move in the ascending channel that dates back to March 2020. The portal also provides clients access to trading signals, strategies, and educational materials.

11. Morgan Stanley

Morgan Stanley relies on strategic vision and growth prospects for various economic sectors. These Wall Street experts say the US30 rate could reach 42,000 points by the end of 2023. This scenario can play out if the US economy continues to show steady recovery trends while innovation and technology stimulate development.

12. Bank of America

Bank of America’s forecasts are based on macroeconomic data and corporate reports. If the US economy slows down amid rising inflation, a reduced stimulus, and tax policy tightening, the US30 rate could reach 34,500 points by the end of 2023. According to these Wall Street analysts, YM could face a negative impact of new COVID-19 outbreaks, geopolitical conflicts, and regulatory pressure.

13. Deutsche Bank

Deutsche Bank models various scenarios and probabilities for economies and financial markets. According to DB’s stock market forecast, the US30 rate could reach 37,000 points by the end of 2023, provided that the US economy maintains balanced average growth and core inflation remains within the Fed’s target range.

DJIA Technical analysis

Let’s look at ways to do a technical analysis of the DJIA. Remember that index pricing depends on many factors: the Federal Reserve monetary policy and interest rate decisions, US economic growth and employment indicators, the political and economic environment in the US and the world, the exchange rate of the US dollar against other currencies, and the financial results of companies included in the Dow Jones Industrial Average.

To make an adequate daily prediction for Dow Jones, you can apply various methods based on your trading strategy, style, investment horizon, and risks. Let’s examine some of the most popular and efficient technical analysis methods in various time frames.

The most popular and simplest Dow Jones analysis technique is using moving averages (MA). Moving averages are lines that show an average YM price over a certain period. They help identify trends, support and resistance levels, and entry/exit signals. For example, if the price is above the moving average, the trend is bullish, and vice versa. If the price crosses a moving average from below to above, it can be a signal to buy; from above to below — a signal to sell.

Using Trading Volumes, you can make a Dow Jones forecast for tomorrow. Trading volumes help determine investor activity and interest in the index and confirm or refute a projected price movement. For example, quotes grow amid high trading volumes, indicating a strong and stable trend. A trend is weak and unsteady if quotes rise amid low trading volumes. If quotes fall amid high trading volumes, selling pressure is strong; if quotes fall amid low volumes, there’s no demand.

This method applies to any period within a day, but most importantly, it works well for projecting reversals and micro trends.

You can combine Trading volumes with the Relative Strength Index, RSI. RSI is an oscillator that measures the speed and change of price fluctuations. It helps identify if an asset is overbought or oversold and determine potential pivot or divergence points. For example, pay attention to its curve when you make a Dow Jones forecast for the next week:

• The RSI above 70 indicates that the instrument is overbought, which may point to a correction or a downward reversal;

• The RSI below 30 indicates that the instrument is oversold, which may point to a pullback or an upward reversal;

• If the RSI shows differing dynamics, it can indicate divergence and signal a possible trend reversal.

If you want to make a 6-month forecast for Dow Jones, I recommend using wave analysis. It is a technical analysis method based on a theory that quotes move in waves, reflecting crowd psychology.

To determine the structure and sequence of waves and predict future price movements, wave analysts use the principles of fractality, symmetry, and harmony.

If you plan to hold positions in the market for a long time, you should be aware of potential corrections followed by equity drawdowns. I use a popular wave analysis tool — Fibonacci ratios — to predict correction target levels. These are support and resistance levels calculated as Fibonacci percentage ratios. Here’s a chart where I schematically laid over the instruments mentioned above.

DJIA Forecast For Next Three Months

Let’s identify other signals using the Ichimoku Kinko Hyo indicator and make a realistic forecast for Dow Jones for the end of the year.

Let’s look at the Dow Jones daily chart. The Tenkan-sen is below the Kijun-sen; both are horizontal. The confirming line Chikou span is under the price chart; the cloud is ascending. The asset crosses the Tenkan-sen and the Kijun-sen from above to below. The price entered the cloud in a correction to the uptrend.

The nearest support level is the lower boundary of the cloud at about 34,000, meaning that the correction is likely to end with a pullback to an uptrend. The nearest resistance level is one of the Chikou span highs at 35,500.

Based on potential correction levels, the asset is expected to grow steadily up to the end of December in the following way:

• start with a pullback from level $34,000;

• testing level $35,100 and correcting to $34,900;

• level $35,700 with correction to $35,500;

• level $ 36,300 with substantial correction to $36,000 ($35,900).

The YM rate is expected to break out at $35,500 before the end of the year, with a potential to break out one of the highs recorded in February 2023 — $36,000. Review the plan and opt for swing trading or scalping if the market price deviates by more than 20%-25% from the expected one at the end of November. That will be the best strategy until the end of the fourth quarter (December).

DJIA trading plan for six months

Before making a trading plan, let’s look at the US labor market as of the beginning of September 2023.

The energy and healthcare sectors showed the highest growth rates — over 2%. Oil and gas companies’ shares were in demand amid increasing prices for these resources. Consumer goods manufacturing grew by 0.33%. The communications sector — by 0.21%. The industrial sector of the labor market ended the week with a slight decline of 0.02%.

The financial sector fell by 0.24%. Bank assets weakened after Moody’s downgraded credit ratings for ten small- and mid-size banks, affecting central-bank international reserves in many partner countries. The basic materials sector lost 1.25% of its market value. Chemical and agricultural stocks showed a significant drop. Consumer Cyclicals sank by 1.49%. The technology sector shrank by nearly 3%.

Now, let’s look at macroeconomic data. The consumer price index (CPI) growth in July was 0.2% m/m and 3.2% y/y, lower than expected. The core consumer price index, excluding food and energy, rose 4.7% YoY. Producer prices grew 0.3% MoM in July, exceeding the 0.2% forecast. The indicator increased by 0.8% YoY, the first rise in a year.

The Fed officials split over inflation. The Federal Reserve board member Michelle Bowman said that further rate hikes were necessary. At the same time, New York Fed President John Williams stated that the rate hike cycle was nearing its end, not ruling out the possibility of a cut in 2024. Philadelphia Fed President Patrick Harker supports stabilizing rates at current levels, while Richmond Fed President Thomas Barkin suggests pausing a rate hike.

Let’s make a trading plan for the next six months. In contrast to the previous forecasting approach using technical analysis, we will look at general macroeconomic events underway and political agenda. The index was at 34,979 points as of the beginning of September 2023, 12.05% higher than a year ago (31,219 points). The DJIA has traded low this year relative to its previous 2022 gains. So, we see that only in the second half of the year (August 2023) did the index rise from an almost two-year drawdown to the values of February 2022. That’s an excellent signal for long positions.

It is also worth remembering that US non-farm jobs data are released at the beginning of each month. This economic report often changes the status quo and sets a local trend for the coming month.

Long-Term DJIA Analysis for 2024

Let’s conduct a technical analysis of the Dow Jones rate trends in the weekly time frame and prepare a detailed forecast for 2024.

The DJIA projected stock price will likely fluctuate between 31,000 and 36,500 US dollars per contract for the rest of the year.

From January, the price will likely begin to rise for two months. The Dow Jones’ “bearish” potential was practically exhausted in the sideways trend last year, although the first quarters of 2022, 2021, 2020, and 2019 suggested only a downtrend. However, the latest unprecedented rate hikes changed everything and strengthened the USD even more. So, the DJIA stock price can be expected to come close to the support at 35,700 USD as early as February. In the second quarter, the chart will then likely pull back, correcting to 32,000 USD. The price can fluctuate from 31,000 to 38,000 USD from the middle to the end of the year.

The table below presents an expected DJIA trading range for each month of 2024.

Forecast for Dow Jones price for 2024

Here’s a forecast for Dow Jones rate in 2024.

Source: Longforecast.com

Forecast for Dow Jones price for 2025

Here’s a forecast for Dow Jones price levels in 2025. Note that long-term scenarios for the Dow Jones price are approximate and subject to revision at any time.

Source: Longforecast.com

Long-term forecast for Dow Jones for 2026-2030

According to some experts, Dow Jones companies do not have much growth potential. They believe that the current bullish trend, the second longest in history, will soon end and the DJIA will drop. Sheaff Brock Investment Advisors founder and partner Dave S. Gilreath disagrees, saying that the bull market will continue in the coming years, and the Dow Jones Industrial Average will exceed 40,000 points by 2025. He argues that companies normally increase profits over time. If net earnings grow 7% annually, it will be about $40 per every $100 invested in five years.

We can get even more optimistic market future ahead of the index if we use a mathematical forecasting model. According to this model, the DJI rate was supposed to reach 30,000 points by 2020, which is the case. The owner of Madrona Funds and Bauer Evans CPA, chief investment officer, lead planner, and senior portfolio manager Brian Evans believes it will rise to 50,000 points by 2030.

Please note: Dow Jones long-term forecast is based on assumptions and cannot be considered 100% accurate.

Long-term forecast for Dow Jones for 2030-2040

The US30 Index is a basket of large and reliable stocks. These companies are industry leaders with high profitability rates and a good reputation. You need to look at the companies’ economic performance to predict the index’s price. Let’s take a look at the most significant capitalizations as of the end of 2023:

• Apple, market cap of $2.962 trillion. The company set new sales records for iPhone, Mac, iPad, Wearables, and Services;

• Microsoft Corporation, market cap of $2.442 trillion. The company registered record growth across all of its business segments, especially cloud services, games, and LinkedIn;

• Visa Inc., market cap of $505,789 billion. The company has more than 3 billion customers in more than 200 countries. It registered large growth across all regions and products, especially debit cards and digital payments;

• UnitedHealth Group Inc., market cap of $441,144 billion. The company upgraded its revenue and EPS forecast for the full year 2023;

• Walmart Inc., market cap of $435,081 billion. The company showed growth across all of its business segments, especially in online sales and the global market;

• JPMorgan Chase & Co., market cap of $426,671 billion. The company showed growth in all of its business segments, especially in investment and retail banking.

The gross profitability of most companies has seldom fallen below 30% over the last 12 months in recent years. The dividend yield is still high. Considering the average net total profitability of 12% in 2023, we can conclude that their cost will grow amid other optimistic general economic indicators in the United States.

Also, consider the popularization and impact of artificial intelligence. Machines controlled about 80% of transactions in the American stock market in 2018. Gartner predicts that human intuition and personal experience will become less and less important when making investment decisions by 2025. Analysts believe that financial institutions may generate additional revenue of $300 billion through artificial intelligence in 2030.

Making a Dow Jones forecast for 10 years, consider the following levels: 40,500 by the end of 2030; next, a correction to 38,000 in 2031, gradual growth by 10-20% by 2039, and reaching 46,000-48,000 by 2040.

History of Dow Jones rate changes

To assess the DJIA rate’s moves and identify its patterns in the stock markets, let’s take a detailed look at the history of the price changes since the creation of the index.

1. DJIA creation, 1896. The index was first published on 26 May 1896 and comprised 12 industrial companies.

2. Great Depression, 1929-1933. The index fell by over 80% during the Great Depression, reaching a low in 1932.

3. Post-war recovery, 1940-1960. After World War II, the index grew rapidly, reflecting the US economic recovery.

4. Crises and corrections, 1970-1980. Significant crises occurred in 1973-1974 and 1987, leading to the DJIA’s decline.

5. Internet boom, 1990-2000. In the late 1990s, the index grew along with high-tech companies.

6. Profitability and recessions, 2000-2010. The Internet bubble burst in the early 2000s, and the 2008 financial crisis followed, pushing the Dow Jones down.

7. Recovery period, 2010-2015. The exchange rate began to recover gradually after the crisis and reached some record levels by 2015.

8. High-tech development, 2010-2020. Big tech stocks, such as Apple, Microsoft, and Amazon, became key growth drivers in the late 2010s.

9. COVID-19 pandemic, 2020. At the beginning of 2020, the global financial market faced the COVID-19 pandemic. The DJIA declined in February-March 2020 but then began to recover quickly after the introduction of stimulus measures.

10. Record levels, 2020-2021. As of September 2021, the Dow Jones Industrial Average reached record levels, exceeding 35,000 points. In 2021, investors expressed concerns over inflation and prospective Fed interest rates hikes, causing market fluctuations.

11. Financial crisis, 2022. The DJIA showed a decline of 14.9% compared to 2021, closing at 30,273.96 points amid the Fed’s attempts to handle inflation. That was the DJI’s worst year since 2008 when it fell by 33.8%.

Here’s a chart showing the events mentioned above that affected market conditions.

What’s the future of the Dow Jones? Is investing in Dow Jones still a good option?

Based on the quotes’ movement, the Dow Jones index has significantly grown in price in recent years. In 1976, it exceeded 1,000 points for the first time, and in 2017 it reached 20,000 points. The Dow Jones is currently trading at above 35,000 points.

However, the question of potential limits to the Dow Jones growth remains relevant. The DJIA has become more volatile, and we can’t exclude daily fluctuations worth hundreds of points. Check out the Dow Jones price forecast for 2023-2024 below.

Source: Longforecast.com

The Dow Jones Industrial Average continues to be in demand in financial markets. It includes global corporations whose shares are extremely popular.

If you are interested in index investing and want to learn more about it, open a free demo account with LiteFinance. You can stay updated with the latest developments by signing up for a free newsletter and investing successfully using the smooth trading interface at LiteFinance.

Price chart of YM in real time mode