DJIA slightly lower in low-volatility session

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• Dow Jones has broken out of a three-month descending price channel.
• Fed’s Powell, Williams speak at event on Wednesday.
• Dow Jones Industrial Average gained 5.07% last week, the largest weekly gain since October 2022.
• Disney is scheduled to deliver fiscal Q4 earnings after the close on Wednesday.
• Unemployment Rate, SLOOS report, credit card delinquencies provide possibility for recession in 2024.

The Dow Jones Industrial Average (DJIA) has drifted 0.15% lower on Wednesday, cutting its decline in half late in the session. US Treasury yields are mixed but much lower toward the end of the yield curve. Crude Oil prices are also down by nearly 3%. The NASDAQ Composite and S&P 500 are barely in the black during a low-volatility session.

The DJIA reached a new range high on Tuesday after breaking out of a three-mong-long descending price channel last Friday. Last week saw the DJIA produce its best gain in a year at 5.07%. Gains have been light to start the week, but the daily chart is flashing a noticeable buy signal.

Wednesday began with a short speech by Federal Reserve Chair Jerome Powell at the Federal Reserve Division of Research & Statistics Centennial Conference. New York Federal Reserve President John Williams will speak later in the day as well. The market is no longer expecting another interest rate hike, but it’s not too late for Fed speakers to still sway opinion.

Disney’s (DIS) quarterly results after the close on Wednesday are the most significant news release for any Dow stock this week. Initial Jobless Claims on Thursday will also be watched, but that is mostly due to it being a slow news week.

Dow Jones News: Analysts pessimistic on Disney earnings 

Disney has been one of the Dow Jones’ laggards this year. The stock is down nearly 18% over the last six months, so any good news is sure to help the index. Disney represents just 1.6% of the index, but a good result for the fiscal fourth quarter could be a tailwind for the Dow.

That tailwind may be hard to come by however. Over the past 90 days, Disney has received 13 downward revisions from analysts for this quarter’s earnings. Just three analysts raised their forecasts.

As it stands, Wall Street consensus places Disney at $0.71 per adjusted share for the quarter ending in September. The revenue consensus comes at $21.42 billion, about a 6% increase from a year ago.

Disney named former Pespsi (PEP) chief financial officer Hugh Johnston as its own CFO earlier this week, and the expectations are that returned CEO Bob Iger will have more changes in store for the media conglomerate.

Billionaire activist investor Nelson Peltz may help determine Disney’s future direction as he says he is waiting on the Q4 results to make his next move. Peltz was rebuffed earlier this year when he tried to gain a board seat by using his $2.5 billion stake in Disney. Bob Iger’s move to trim costs at Disney might be enough to hold Peltz at bay, though a report from CNBC on Wednesday said Peltz might still launch a proxy fight to gain a chunk of board seats.

During the Q4 earnings call, the market will focus on the health of Disney’s streaming business, which has been eating up a lot of investment over the past three years. Disney raised prices by at least 20% for both its Hulu and Disney+ free versions in August.

Economic data shows signs of possible downturn

The US Unemployment Rate has climbed from 3.5% in July to 3.9% in October. While that is still low, this is the highest rate since January 2022. That makes Thursday’s Initial Jobless Claims data for the week ending November 3 more significant than normal.

Consensus expects Initial Jobless Claims to come in at 218K, one notch higher than the previous week’s 217K print. A much higher figure might spook the market.

Additionally, credit card delinquencies are now higher than they were in the pre-pandemic period. 3% of a record high $1.08 trillion of US credit card debt was at some stage of delinquency at the end of September.

“The continued rise in credit card delinquency rates is broad based across area income and region, but particularly pronounced among millennials and those with auto loans or student loans,” wrote Donghoon Lee of the New York Fed.

A third sign of doom comes via Deutsche Bank’s research department. Based on October’s Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices, about 30% of banks have tightened their lending standards for small firm commercial and industrial loans. Deutsche Bank’s research says that when this has happened in the past, a recession appears about 90% of the time over the next 12 months.