Dow Jones churns as traders weigh jobs data and Fed minutes

The Dow Jones fell 150 points on Wednesday after US jobs figures missed the mark.
ADP hiring data slowed more than expected, and wage growth shrank to a two-year low.
Investors await the Fed’s latest Meeting Minutes from December’s rate cut assessment.

The Dow Jones Industrial Average (DJIA) ground its way lower once again on Wednesday. The index backslid a choppy 150 points after equities turned tepid on the back of a misfire in preview jobs data ahead of this week’s key Nonfarm Payrolls (NFP) report. Stocks slowly recovered through the US market session, trimming back to the day's opening bids near 42,550.

ADP Employment Change showed a slower pace of hiring than markets expected in December, easing to 122K versus the expected 140K and November’s 146K. ADP wage data also pumped the brakes and hit its slowest pace since mid-2021.

The Federal Reserve's (Fed) latest Meeting Minutes revealed policymakers may be far more concerned about incoming President Donald Trump's tariff plans than initially believed. Despite recent insistence from Fed speakers over the past few weeks where policymakers talked down the possible impact of immigration and trade policies on the Fed's decision-making, the Fed's latest policy meeting featured four separate discussion points regarding drastic changes to US policy that could have far-reaching impacts on central banking. Elsewhere in the meeting minutes, the Fed broadly agreed that it was time to slow the pace of rate cuts, confirming that policy uncertainty is one of the key drivers of the Fed's internal expectations of far fewer rate cuts in 2025 than markets were previously expecting.

US markets will close early on Thursday, so traders should expect a tightening in market volumes during the American trading window. US operations are winding down in observance of the passing of former US President Jimmy Carter, who died in late December at the age of 100.

Dow Jones news

Equities listed on the Dow Jones were split roughly down the middle on Wednesday, but concentrated losses in key stocks are dragging the average to the low side. Johnson & Johnson (JNJ) tumbled to a new yearly low despite reaching ‘Fast Track’ status with the Food & Drug Administration for several of its new pharmaceutical offerings. JNJ is now down around 3% on the day and pushing below $142 per share.

Dow Jones price forecast

The Dow Jones’ bearish tilt, which began in late November, continues to weigh on the major equity index. The DJIA is on pace to close in the red for a sixth consecutive week and remains down nearly 6% from its all-time peak of 45,071 in November. Of the last 19 consecutive trading days, the Dow Jones has closed flat or in the red for all but three of them, including a record-setting run of 11 straight bearish sessions.

Despite a near-term bearish swing, downside momentum still faces significant headwinds. The DJIA is still trading north of the 200-day Exponential Moving Average (EMA) near 41,200, and bidders are still trying to get their feet under them and muscle price action back above the 50-day EMA near 43,150.

Dow Jones daily chart

Dow Jones FAQs

What is the Dow Jones?

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.

What factors impact the Dow Jones Industrial Average?

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.

What is Dow Theory?

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.

How can I trade the DJIA?

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.

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