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).

AUD/USD stays defensive below 0.7150 after Chinese data

AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. Mixed Chinese activity data for August also fail to inspire the Aussie.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold struggles near multi‑week low as Fed hike bets and geopolitical risks boost USD

Gold drifts lower for the second straight day, and trades around the $4,265-$4,264 region, down 0.80% during the first half of the European session on Tuesday. The commodity remains within striking distance of an over one-month low, which it touched on Monday, as traders keenly await the crucial two-day FOMC policy meeting, starting later today.

Dogecoin clings to EMA support as recovery lacks conviction

Dogecoin (DOGE) hovers around $0.083 at the time of writing on Tuesday after finding support around the key support zone the previous day. Quiet institutional demand, along with mixed derivatives positioning, suggests fading interest in the dog-themed meme coin.

Markets slide as FOMC approaches

The US Dollar remains strong as markets turn increasingly cautious ahead of the FOMC. Stocks are tumbling, while Gold and Silver are moving lower under pressure from the stronger Dollar. The Japanese Yen is weaker again, while Crypto is correcting. BTC is approaching a key technical test and could fall below its 50-week moving average, while ETH remains above $2,405.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.