- The Dow Jones rattled on Tuesday and continued to battle the 45,000 handle.
- ADP jobs report says the number of new worker positions grew less than expected.
- Despite firm gains in key stocks and sectors, the Dow Jones looked downward.
The Dow Jones Industrial Average (DJIA) churned in a tight range on Tuesday as investors grapple with mixed data and an overall headwind in non-tech stocks. ADP jobs figures hinted at a weaker-than-expected hiring phase in November, albeit by a slight margin.
Federal Reserve (Fed) Chairman Jerome Powell made an appearance on Tuesday, but the Fed head stuck closely to familiar talking points. Markets saw a brief spike in volatility, but the lack of momentous announcements regarding the odds of a rate cut in December saw investor interest wane.
US ADP Employment Change figures came in slightly below expectations for November, printing at 146K compared to the median market forecast of 150K. The figure eased further back from October’s initial print of 233K, which was revised sharply lower to 184K. With ‘preview’ Nonfarm Payrolls (NFP) figures showing potential slack in the labor market, investors are losing their sure-footedness about how Friday’s NFP print may turn out.
The US ISM Services Purchasing Managers Index (PMI) for November also slipped back to a three-month low, easing to 52.1 MoM compared to the forecast decline to 55.5 from October’s 56.0. While the Services ISM PMI component is still holding above the contractionary 50.0 level, the number still lost ground and pairs poorly with the Manufacturing PMI component released earlier this week that showed aggregated business opinions expect a slowdown in business conditions in the months ahead.
Dow Jones news
Despite battling into the high side throughout the day, the Dow Jones struggled on Wednesday, with roughly half of the board dipping into the red. Salesforce (CRM) rallied by a stunning 9% to cross $362 per share, climbing to all time highs on the back of continued promises of integrating AI into the company’s data management operations, despite missing the bottom line on earnings per share in its latest earnings call.
Dow Jones price forecast
Bullish momentum in the Dow Jones chart may have chilled in recent days, but bidders aren’t leaving much room for sellers to move. The major equity index is pinned close to record highs set north of the 45,000 handle. While buyers have yet to break into a fresh set of record highs this week, odds favor the high side as short momentum remains more of a bear trap than an opportunity.
Traders interested in an exhaustion play should anticipate a potential decline to the 50-day Exponential Moving Average (EMA), which is currently rising through 43,000. However, due to a long-standing pattern of bouncing off this key moving average, it's advisable for traders to avoid trying to time the exit and instead follow the crowd as the market moves into a new upward leg.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD trades modestly flat above 0.6400 after Aussie trade data
AUD/USD reacts little to better-than-expected Australian Goods Trade Balance data and remains in a range above 0.6400 early Thursday. Rising bets for an early RBA rate cut cap the Aussie's upside amid China's economic woes and US-Sino trade war fears. Eyes turn to US data, Fedspeak.
USD/JPY fades the dovish BoJ commentary-led uptick above 150.50
USD/JPY is reversing the bounce to near 150.70 in the Asian session on Thursday. The pair remains weighed down by rising bets for another BoJ rate hike this month, shrugging off the dovish comments from BoJ policymaker Nakamura and a modest recovery in the US Treasury bond yields.
Gold price lacks firm near-term direction and is stuck in a familiar range
Gold price extends its sideways consolidative price move in a familiar range, awaiting a fresh catalyst before the next leg of a directional move. Geopolitical tensions, trade war fears and the overnight decline in the US bond yields offer support to the safe-haven XAU/USD.
Ripple's XRP could see a price rebound despite retail activity decline, RLUSD launch delay
XRP traded near $2.4 on Wednesday as Ripple Labs clarified that its RLUSD stablecoin will not debut on exchanges despite a rumored launch among crypto community members. Amid a sharp decline in XRP's price, on-chain data shows the remittance-based token still has the potential to resume its rally.
Four out of G10
In most cases, the G10 central bank stories for December are starting to converge on a single outcome. Here is the state of play: Fed: My interpretation of Waller’s speech this week is that his prior probability for a December cut was around 75% before the data.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.