Dow Jones Industrial Average cools its heels as election rally runs out of gas

The Dow Jones eased on Thursday as Trump election rally short-circuits.
US producer-level prices printed at expectations, easing investor concerns.
Friday brings Retail Sales data to round out the trading week.

Joshua Gibson FXStreet

The Dow Jones Industrial Average (DJIA) pumped the brakes on the recent post-election rally that saw a decisive win for presidential candidate and former President Donald Trump. Investors overwhelmingly perceived the returning contender for the White House as a pro-market representative within the US government. The election glut in equities is now fizzling out as equities pare back slightly from record highs.

Producer Price Index (PPI) producer-level inflation figures came in roughly as expected, despite a slight upswing in annualized core PPI numbers. Headline PPI matched forecasts in October, rising 0.2% MoM compared to the previous month’s revised 0.1%. Core PPI for the year ended in October accelerated more than expected, ticking up to 3.1% compared to the expected 3.0% rising above the previous period’s 2.9%, which was also revised slightly higher from 2.8%.

US Retail Sales are due on Friday and is the last batch of meaningful US data on the docket this week. October’s Retail Sales are expected to ease to 0.3% MoM from the previous 0.4%, while Retail Sales excluding automobiles are expected to decline to 0.3% from 0.5%.

Dow Jones news

The Dow Jones is roughly on-balance on Thursday despite a slight easing in the index’s headline average price. Half of the Dow’s constituent equities are in the green for the day, with gains led by Walt Disney (DIS). Disney is up nearly 7% for the day and testing $110 per share after beating earnings in FY Q4. On the low side, Salesforce (CRM) eased lower around 2.5% to $333 per share as the AI-fueled tech rally takes a breather on Thursday.

Dow Jones price forecast

The Dow Jones is struggling to hold onto the 44,000 handle as the major equity index eases back from record highs set just north of 44,4000. Downside potential remains limited as bears have few footholds to grab onto, but a near-term downturn to the 50-day Exponential Moving Average (EMA) near 42,400 can’t be discounted.

The Dow Jones is still trending deep into bull country regardless of any near-term drags; the index is on pace to close in the green for all but two months of 2024. The DJIA is also trading well above it’s 200-day EMA near 40,150, with nearly 10% of value between current price action and the long-term moving average.

Dow Jones daily chart

Economic Indicator

Producer Price Index (YoY)

The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

GBP/USD advaces beyond 1.3450 after BoE decision, US Q2 GDP

GBP/USD gains positive momentum on Thursday, surpassing 1.3450 and trading at fresh multi-week highs. The Bank of England decided to maintain the benchmark rate unchanged at 3.75%. The MPC voted 6-3 to keep rates on hold, with the 3 dissenters favoring a rate hike. US Q2 GDP missing expectations helped the pair advance, while renewed US Dollar weakness across the FX board pushed the pair further up ahead of the monthly close.

EUR/USD confortable around 1.1530, highest in six weeks

The EUR/USD pair trades around 1.1530 in the American session on Thursday, reaching fresh six-week highs. The US Dollar is in sell-off mode, with multiple factors weighing on the American currency. Not only did the Federal Reserve vote divided to keep rates on hold on Wednesday, creating doubts about a September hike, but US Q2 GDP missed expectations. A suspected JPY intervention adds pressure on the Greenback.

Gold recovers the $4,100 level as US Dollar weakens further

Gold trades just above $4,100 amid a US Dollar sell-off. The Greenback enjoyed some near-term demand following Wednesday's post-FOMC downfall, but was unable to retain its gains. The preliminary estimate of the US Q2 GDP showed the economy grew at an annual rate of 1.5%, missing the market's expectations of 2.1%.

Bank of Japan set to keep interest rates unchanged after suspected Yen intervention

Investors are turning their attention to the Bank of Japan’s monetary policy announcement on Friday, after the Japanese Yen staged a dramatic rebound during Thursday's American session. The move came amid growing speculation that Japanese authorities intervened in the foreign exchange market after USD/JPY tumbled from above 163.00 to below 158.00 within minutes.

Aave to sunset Sonic, Aptos, zkSync, Scroll reserves, affecting $98 million in supply

Aave is planning to sunset 75 low-activity reserves across its decentralized finance protocol as part of a broader effort to reduce operational, technical and economic risks across its network of deployments.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.