- The Dow Jones Industrial Average has been losing ground on Trump's hawkish message.
- Fed Chair Powell may send it further down amid upbeat economic figures.
- Wednesday's four-hour chart is pointing to a risk of losing support.
"If we don't make a deal with China, we will substantially raise tariffs on Chinese imports." These words by President Donald Trump have been weighing on markets, including the president's preferred stock index – the Dow Jones Industrial Average (DJIA).
While Trump also expressed optimism about reaching a deal with the world's second-largest economy, investors had already been pricing in the removal of duties – not new ones. Moreover, Beijing has hit back at the president – showing that it sees his speech as a glass half empty.
Dow Jones Index
At the time of writing, futures on the Dow are standing at 27,596 points, shy of the historic high – and the double-top – around 27,774. Moreover, the indicator is at risk of losing the uptrend support line that has accompanied it since last week and momentum on the four-hour chart has turned to the downside.
Support awaits at 27,570, which is the confluence of the 50 Simple Moving Average, the daily low, and the uptrend support line. The next level to watch is 27,416, which is where the trend line was formed. It is followed by 27,284, which was a temporary high on the way up in late October.
Resistance awaits Dow Jones Index at 27,774 mentioned earlier. Higher, the round level of 28,000 is a critical psychological target, and 28,226 is next.
Powell's power-play
The next fundamental Dow-driver is Jerome Powell, Chairman of the Federal Reserve, who testifies on Capitol Hill. Powell is set to paint a cautiously optimistic picture of the US economy, following upbeat Non-Farm Payrolls. The Fed has two mandates, employment, and inflation, and both have been improving.
While an upbeat economy is positive for stocks, the robust data lowers the chances of further rate cuts. The Washington-based institution signaled a pause, but bond markets foresee cuts in 2020. Powell's testimony may lower the odds for rate reductions, thus weighing on stocks.
Overall, Trump trumped the Dow Jones Index lower, and Powell may extend its misery – to the chagrin of the president.
Powell Preview: Praising the economy and rebutting the President
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