The Dow Jones Forecast
The Dow Jones Industrial Average (DJIA) or Dow Jones 30 is a collection of 30 large cap stocks, a group of stocks which is also included within the S&P index, and therefore in S&P forecasts. It’s a major component in US stock market forecasts.
Should you invest in DOW stocks in 2020? The Dow has fallen 1000 pts in the last 3 days, and yet it always comes back. Some day traders are enjoying big profits via the volatility. But a big correction could happen driven by negative news. The DOW may the the index most exposed to China trade.
Consider what will happen if President Trump successful repatriates industry back to the US from China. It doesn’t look like he’s wavering from his goal. In fact, the recent China investment restrictions should propel US industry. New investment in US companies should elevate their stock values.
Gold, and other commodities aren’t a great alternative due a global slowdown. The energy sector is looking at an oil glut and falling prices in 2020. And falling interest rates can only aid American companies ability to compete.
Large institutional investors (i.e. hedge funds and mutual funds) invest heavily in these blue chips as a safe long term investment. These are big companies who hold monopoly market dominance. If anti-trust and anti-monopoly sentiments rise, these companies stand to be hit hardest (FAANGS).
The 30 DJIA stocks by themselves offer a very skewed perspective of the stock market and the economy as a whole. In fact, many of these companies operate globally, and are therefore outside the real US economy, deeply affected by International trade deals.
Here are the Current 30 DJIA Stocks:
- 3M (NYSE:MMM)
- American Express (NYSE:AXP)
- Apple (NASDAQ:AAPL)
- Boeing (NYSE:BA)
- Caterpillar (NYSE:CAT)
- Chevron (NYSE:CVX)
- Cisco (NASDAQ:CSCO)
- Coca-Cola (NYSE:KO)
- The Walt Disney Company (NYSE:DIS)
- DowDuPont (NYSE:DWDP)
- ExxonMobil (NYSE:XOM)
- General Electric (NYSE:GE)
- Goldman Sachs (NYSE:GS)
- The Home Depot (NYSE:HD)
- IBM (NYSE:IBM)
- Intel (NASDAQ:INTC)
- Johnson & Johnson (NYSE:JNJ)
- JPMorgan Chase (NYSE:JPM)
- McDonalds (NYSE:MCD)
- Merck (NYSE:MRK)
- Microsoft (NASDAQ:MSFT)
- Nike (NYSE:NKE)
- Pfizer (NYSE:PFE)
- Procter & Gamble (NYSE:PG)
- Travelers Companies (NYSE:TRV)
- United Technologies (NYSE:UTX)
- UnitedHealth (NYSE:UNH)
- Verizon (NYSE:VZ)
- Visa (NYSE:V)
- Wal-Mart (NYSE:WMT)
DOW Could Pick Up in 2021
Although Dow performance has been very strong since President Trump took office, many believe the Dow Jones average will struggle until 2021. LongForecast.com predicts better performance right after the 2020 Presidential Election. They have the S&P and NASDAQ indexes rising about the same time. Although the NASDAQ is forecasted to do much better. This makes sense as investment leaves the blue chips and is moved to profitable US tech stocks. The only country doing well now is the United States.
So far this year, the Dow Jones industrials have risen over 17% while the Nasdaq index is up 25% and the S&P 500 rose 19%. Great results, yet the usual fall season forecast is often subdued. Consumer sentiment is down and retail sales may falter. Interest rates and mortgage rate forecasts are likely to fall further, but we don’t know what the highly policitcal FED will do.
DOW Reaches Record Level
The DOW reached record levels this summer and if Trump were to give China a big, big break in a new bilateral trade deal, the DOW would move upward. It could reach 30,000 by next May if China gets its way. Yet President Trump is tough on dealing, and won’t be giving China freebies. He trashes them frequently on Twitter and his disdain for them is obvious.
And the Democrats wouldn’t give China major freebies either if they won the 2020 election. Dems or Trump, there’s no going back to the past — a key fact for the DJIA.
Dow Jones volatility is a much different thing than what affects the S&P forecast or the NASDAQ forecast. DJIA are all about political power and the primacy of the monopolies. Within Free Trade, the monopolies could do as they pleased and name their price. But the end of Free Trade and the enforcement of China tariffs has ended it.
Best Dow Jones Stock Picks
So far this year, the 5 best performing Dow stocks are Microsoft (up 35%), Cisco (up 32%), Visa (up 31%), American Express (up 31%), and Disney (up 29%) according to Yahoo Finance.
When President Trump was elected, the Dow Jones average rocketed higher as the chart shows. However, Trump was not about to support the profits of big multinationals who merely treated the US as their retail outlet. His campaign promise was to make America Great, drain the swamp, and grow the US economy.
The tariffs which Trump has imposed had the biggest impact on the NYSE Dow listed, big industrial stocks which primarily use cheap foreign labor to sell in advanced economies such as Europe and North America.
Politics Determines DJIA Predictions
This makes predictions of DJIA company stock prices a little bleak. Moving production and fulfillment channels is not an easy thing to do. Further many CEOs beleive political opposition to change will mean President Trump won’t be successful. They believe the status quo resistance globally will force things back to the pre-2016 conditions. They likely feel the turbulence and volatility of this big change will make voters turn against him.
If President Trump loses the election, it would mean a rapid sell off of US stocks and stock market crashes, as investors money flees the country. The 2020 recession or slowdown, could potential mean a real stock market crash, and the Dow industrials would be hit hard. It’s impossible to predict what will happen in the aftermath because the democrats don’t even have a leader yet. After frantically criticiziing Trump for everything he did, they would likely have to pick up his ball and run with it.
As Trump persists in the Tariffs and production repatriation to the US, CEOs will be forced to begin building production facilities in the US. When this happens, a massive reinvestment in US companies will result which will improve consumer sentiment, growing retail spending too. But it’s a process that hasn’t begun yet. Until all hope of keeping China production is extinguished, the stock markets will be volatile.
Common sense, new government spending limits, and a $500 billion yearly trade deficit is something even the Democrats can’t sweep under the carpet. With protectionism sweeping the world, smaller US companies are likely to find themselves more competitiive and agile, and able to get off the ground. Look for those companies who are willing to create US-based supply chains to do really well in 2020 and beyond. US stocks have the brightest outlooks. see out best stocks to buy for 2020.
Keep in mind that monopoly companies such as Amazon, Google, Sony, Microsoft, and Apple can crush any small to mid cap threats to their dominance. Utility companies in electric, transport, pharmacrueticals, and telecommunications are positioned best to benefit from the US economic forecast.
The most recent round of tariffs imposed September 1st means blue chip companies that import products or parts into the US must bring production back to the US. The Dow Jones average has been resilient however, despite the threat to their cheap labor sources. While some threaten to move production to Vietnam, India, or Mexico, it’s only a temporary evasion of taxes. Inevitably, production must return to the US.
Is it wise to invest in Dow Jones stocks? Likely not. It’s wiser to look at top performing US stocks on the S&P, or small caps on the Russell Index. The NASDAQ index as well holds stocks with better upside, given technology won’t fail even during a recession. Those companies using AI (artificial intelligence) should be of particular interest to you.
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