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).

EUR/USD stays defensive below 1.1600 as USD rebounds

EUR/USD trades marginally lower below 1.1600 in the European session on Friday. The pair edges down as the US Dollar rebounds slightly after Thursday’s massive profit-taking pullback. Looming US-Iran uncertainty revives the haven demand for the Greenback, while the Euro takes a breather after the hawkish ECB hike-led rally.

GBP/USD holds steady above 1.3400 ahead of US sentiment data

GBP/USD recovers losses and trades modestly flat above 1.3400 in the European trading hours on Friday. The UK Gross Domestic Product (GDP) declined by 0.1% in April, limiting the pair's upside amid renewed US Dollar weakness. The focus now remains on the US Michigan Consumer Sentiment data.

Gold flatlines above $4,200; bearish bias intact amid US-Iran risks

,Gold recovers modest intraday losses, and turns flat during the first half of the European session, though it remains below the daily peak. Despite uncertainty over the US-Iran peace deal, a steadier mood fails to help the US Dollar in preserving its gains. This is seen as a key factor offering some support to the commodity.

Pi Network: Bulls attempt comeback as bearish strength fades

Pi Network (PI) is trading at around $0.120 after a modest recovery the previous day. Despite this recent rebound, traders should be cautious as a scheduled unlock of 14.8 million PI tokens on Friday could limit the token's recovery potential by increasing market supply. Meanwhile, the technical outlook is showing early signs of fading bearish momentum, suggesting a short-term bounce.

UoM Consumer Sentiment Index expected to remain depressed near historical lows in June

The University of Michigan (UoM) will release the preliminary estimate of June’s Consumer Sentiment Index on Friday. The report is expected to show that consumers’ confidence remains depressed.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.