Dow Jones Industrial Average tumbles over 350 points on Friday

The Dow Jones fell seven-tenths of a percent on Friday.
Stocks are paring back recent election-fueled gains.
US Retail Sales beat forecasts, but still grew by a smaller amount in October.

The Dow Jones Industrial Average (DJIA) trimmed it’s recent bull run, declining over 350 points at its lowest and giving back roughly 0.85% as investors grapple with an increasingly uncertain future. US Retail Sales beat expectations but still eased back from previous figures, and Federal Reserve (Fed) Chair Jerome Powell splashed cold water on rate-cut-hungry investors this week when he reaffirmed that the Fed wasn’t “in a hurry” to cut interest rates further.

The post-election “Trump rally” is set to continue unwinding as the Trump campaign begins to leak potential candidates for key official positions that former President Donald Trump intends to install at the beginning of his second term in January. Pharmaceutical stocks took an unexpected hit on Friday after Trump’s team announced their plans to nominate vaccine skeptic Robert F. Kennedy Jr. to the head of the US Department of Health and Human Services. RFK Jr. has openly discussed his plans to ban several vaccines and other health products outright, a surprisingly hyper-regulatory move that flies in the face of the broader market’s initial exuberance at a Trump election win which was meant to carry further deregulation efforts to the public marketplace.

US Retail Sales grew by 0.4% MoM in October, slightly above the 0.3% forecast but still down from September’s revised print of 0.8%. Core Retail Sales, or Retail Sales excluding automobile purchases, failed to meet expectations, growing by a scant 0.1% compared to the expected 0.3% and even further below the previous month’s 1.0% revised print.

Dow Jones news

Despite steep headline losses in key equities, the Dow Jones is roughly on-balance on Friday, with about half of the major equity board’s listed stocks finding the green for the day. Disney (DIS) rose another 5.3% to $115 per share as the entertainment giant enjoys a firmer rebound in quarterly revenues than many investors anticipated. Meanwhile, Amazon (AMZN) and Amgen (AMGN) both fell around 4.5% on the day to $201 and $282 per share, respectively, as tech stocks and biomed stocks take an end-of-week hit.

Dow Jones price forecast

Despite a bearish extension on Friday sending the Dow Jones deeper into the red for the week, there’s still plenty of room to run to the downside before technical warnings begin to emerge. Bullish pressure could also reappear in the charts at anytime as investors remain hopeful to keep a firm grasp on record high territory.

The Dow Jones is poised to end the week lower by 1.3% despite setting an other new all-time high bid earlier this week at 44,485. The nearest technical barrier sits at the 50-day Exponential Moving Average (EMA) near 42,430.

Dow Jones daily chart

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.

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