US 30

Over the past five trading sessions, the Dow Jones index has posted a decline of more than 2%, currently hovering around 42,000 points.

Despite having registered two consecutive recovery sessions, the index is now showing new declines, accumulating a loss of more than 5% over the last ten trading sessions.

US indices were trading higher across the board, shaking off a weaker start for the index futures, as traders speculated, thanks to a CNBC post, that Donald Trump’s reciprocal tariffs set to be announced shortly will not go into effect until possibly April 1, meaning plenty of time for affected nations to strike a trade deal.

Dow Jones technical analysis: The major US indices such as the Dow and S&P 500 continue to trade inside ranges and unable so far to break out to new all-time highs, unlike European indices where the DAX has surged to yet another record today.

Dow Jones dropped over 2% during the last trading week, falling from the peak of 43,400 recorded in late December 2024.

The US stock markets were trading mixed today. The Dow was up more than 1% at the time of writing, boosted by IBM and JPMorgan shares. On the flipside, this year’s best performing index, the Nasdaq 100, had an off day, down about 0.9% as shares in Nvidia fell by 6%, down for the third consecutive day.

Today’s payroll data reiterated the run of strong labor market data with wages growing at 4% a key concern for the Fed. Futures markets reduced the probability of early rate cuts, but traders made few changes to their bullish stance on equities, bonds, gold or the dollar.

The Dow Jones has quickly shaken off yesterday’s late losses is challenging record highs despite the comedown of the Fed minutes yesterday. The market remains optimistic over the state of the US economy, supported by today’s various jobs sector data releases; the flip-side is that too much strength could slow the pace of interest rate cuts with the Fed “likely at or near its peak rates” according to December policy meeting minutes yesterday. The Bitcoin rally will be tested pretty soon, as the SEC is intended to approve (or not) Bitcoin ETFs.

Oil prices appear to have found support at $70 per barrel, with news of US stock building, further OPEC+ production cuts and Middle East tensions spurring buying action. The Fed’s December meeting minutes were cagey on the outlook for interest rates in 2024. JOLTS labor market data pointed to further weakness, good news for inflation.

Equity, bond, and gold investors are pricing in large rate cuts in 2024, starting in March, but this week’s jobs data could spoil the fun. A bullish December for stocks might have pulled forward the typical January rally, spurred by the belief that the Fed is about to pivot. US Treasuries sold off in morning trade, with worries about the appetite to digest the major volume of new issues. There is some risk of disappointment in the interest rate outlook, notably with commodity prices indicating persistent inflation so there is less chance of a rate-cutting bonanza.

The Russell 2000 was again the strongest US index, continuing a trend evident for two months. Gold prices touched $2,082.5 per ounce this morning, buoyed by a mixture of risk aversion and the anticipation of lower interest rates. This morning’s economic data showed strong durable goods demand and a modest decline in a key inflation gauge, the ‘PCE deflator’, generally supporting rate cuts early next year.