Dow Jones Industrial Average dips as AI investments drive broader market gains

The Dow Jones eased back below 47,500 on Monday, though losses remain limited.
Equity markets are overall higher to start the new trading week as Mag 7 investment roulette continues.
ISM PMI data showed a slight easing in business sentiment, but the index remains within normal levels.

Joshua Gibson FXStreet

The Dow Jones Industrial Average (DJIA) faced fresh declines on Monday, kicking off the new trading week with a 200-point decline. The Dow briefly tested below the 47,250 level for the first time in over a week, as 'Magnificent 7' concentrated investment gains lift other indexes.

Amazon (AMZN) saw a fresh rally on Monday, climbing around 5% after the internet ownership and baubles shipping giant announced a deal to invest $38 billion in ChatGPT maker OpenAI. Iren (IREN) data center supplier also inked its own $9.7 billion deal with Microsoft to provide additional hardware architecture to meet the ever-growing LLM tech growth demand. At the top of the pile, the lone chipmaker giant at the top of the AI tech mountain Nvidia (NVDA) climbed 3.7% as both of the AI investment deals announced on Monday will involve providing access to Nvidia hardware.

ISM PMIs show businesses still struggling with cautious buyers

The latest Institute for Supply Management (ISM) Purchasing Managers Index (PMI) report dipped to 48.7 in October, missing expectations and falling back slightly from September’s 49.1. Demand indicators within the ISM report broadly improved over the month, however all still remain in contraction territory, implying businesses are struggling to find new customers or convince current clients to expand operations. Overall, manufacturing activity among businesses that bothered to submit responses to surveys showed a net decline in economic activity in the manufacturing sector for an eighth straight month.

The Federal Reserve’s (Fed) speech patterns have taken a hard left turn as of late, veering into a more chaotic presentation than usual as policymakers’ opinions begin to deviate from a carefully crafted consensus. Investors have grown used to a certain level of organized pageantry from Federal Reserve talking points, but a brave new world has opened up before markets based on Fed Chair Jerome Powell’s surprisingly cautious stance at the Fed’s latest rate call. Fed officials also gave a rare three-way vote last week, with a few flyaway voters advocating for even steeper rate cuts or no cuts at all.

The shifting stance within the Fed has thrown market expectations for a December interest rate cut into jeopardy. According to the CME’s FedWatch tool, rate traders are still pricing in over 65% odds that the Fed will deliver a third straight interest rate cut on December 10; however, the majority of rate market bettors see even greater odds that the Fed will be pushed into waiting until January to deliver another 25 basis point rate cut.

Dow Jones daily chart

Economic Indicator

S&P Global Manufacturing PMI

The S&P Global Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity in the manufacturing sector is generally declining, which is seen as bearish for USD.

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

Euro defends 1.1500 level ahead of US data

EUR/USD struggles to make a decisive move in either direction and trades in a tight channel above 1.1500 on Tuesday. Investors cling to a cautious stance amid the uncertainty surrounding the situation in the Middle East and help the USD stay resilient against its rivals, limiting the pair's upside ahead of the next batch of US data.

Ripple Price Forecast: XRP extends technical weakness despite whales increasing exposure

Ripple (XRP) declines for a second day in a row, trading around $1.07 at the time of writing on Tuesday. The remittance token has continued to sustain a bearish outlook, aligning with the broader cryptocurrency market.

Volatility waits for fresh catalyst ahead of US-Iran 'talks'

EU mid-market update: SpaceX and AMD to report after the close; Volatility waits for fresh catalyst ahead of US-Iran 'talks'. - Middle East and energy drives sentiment still.

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.