Dow Jones roils near familiar levels on Monday

The Dow Jones grappled with the low end to kick off the trading week.
US PMI activity figures came in better than expected, but still in contraction territory.
Markets are gearing up for another print of key NFP jobs figures this week.

The Dow Jones Industrial Average (DJIA) knocked lower on Monday, falling off-balance after US Purchasing Managers Index (PMI) figures came in better than anticipated but showed US business activities are still on the low side of expectations. The Dow Jones recovered into an off-kilter stance, grappling with the day’s opening bids, but the major equity index is still tilted toward the downside just south of the 45,000 handle.

US ISM Manufacturing PMI business activity survey results rose to a five-month high of 48.4 in November, rising from October’s print of 46.5 and beating the median market forecast of 47.5. Despite the upswing in indexed respondent expectations, ISM Manufacturing PMI figures have remained below the key 50.0 level since April, keeping investors leery about the strength of the broader US economy below the surface figures.

ISM Services PMI figures for November will print later in the week, and there is plenty of preview data in US employment figures before Friday’s Nonfarm Payrolls (NFP) print. JOLTS Job Openings for the month of October will print on Tuesday, with ADP Employment Change slated for Wednesday. Weekly Initial Jobless Claims will round out the labor preview prints on Thursday.

Dow Jones news

Despite an overall upbeat tone in equities on Monday, most of the Dow Jones index was stuck in red territory for the day. Two-thirds of the DJIA is set to end Monday lower than they started, with losses led by Amgen (AMGN), which fell 1.6%, backsliding to $278 per share. Declines in the banking sector also sent JPMorgan (JPM) lower, which eased 1.3% to fall below $250 per share.

Elsewhere on the Dow Jones, Amazon (AMZN) found extra room on the upside as Black Friday and Cyber Monday shoppers pile into the online retail platform.

Dow Jones price forecast

Bullish moment has drained out of daily candlesticks on the Dow Jones, with price action battling for a foothold just below 45,000. The major equity index tested the key major handle several times this week, but bidders have run out of gas in the near-term. Despite easing buying pressure, downside momentum remains incredibly limited, with sellers struggling to make headway back toward 44,500.

Some form of a pullback should be expected on the charts after the Dow Jones put in its best single-month performance of 2024 in November. The DJIA rose over 7.5% MoM, taking the Dow to nearly a 20% gain YTD.

Dow Jones daily chart

Economic Indicator

ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The indicator is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that factory activity is generally declining, which is seen as bearish for USD.

Why it matters to traders?

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are considered to be leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labour market and inflation.

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