Dow Jones slips into a seventh straight down day amid tepid markets

The Dow Jones falls another 0.25% during quiet Friday trading.
Equity indexes are broadly lower as investors weigh their options.
Markets already look ahead to next week’s Fed rate call on December 18.

The Dow Jones Industrial Average (DJIA) softened during a sedate Friday session. The economic calendar was strictly a low-tier affair during the US market session, leaving investors to stew on the future pace of rate cuts from the Federal Reserve (Fed). The DJIA extended a thin but persistent near-term decline, dipping further below the 44,000 handle and posting a seventh straight downside trading day.

US Export and Import Price Index figures released on Friday broadly beat expectations, but the low impact data prints barely registered on the needle as investors look ahead to next week’s high impact economic data docket. A fresh round of US Purchasing Managers Index (PMI) survey figures will kick off next week, with S&P Global Manufacturing and Services PMI figures due on Monday. US Retail Sales figures for November will follow up on Tuesday and are expected to rise to 0.5% from 0.4% MoM.

US inflation metrics accelerated in November, according to key data releases this week. However, the uptick in costs wasn’t enough to push investors off their current bets of a quarter-point cut from the Fed’s rate call due next week on Wednesday, December 18. According to the CME’s FedWatch Tool, rate traders have piled into confident bets that the Fed will cut one last time in 2024 with 97% odds priced in of a 25 bps rate trim next week.

Dow Jones news

Most of the Dow Jones is trading on the sedate side, but losses in key equities are dragging the overall board lower with Nvidia (NVDA) shedding around 2.5% and declining to $134 per share as the broad market tech rally takes a breather. On the high side, UnitedHealth Group (UNH) has recovered 1.2% on Friday, climbing back above $522 per share after several days of headline-driven losses.

Dow Jones price forecast

Friday’s 100-plus point decline in the Dow Jones index puts the major equity board down almost 3% from recent record highs above 45,000. Despite seven straight trading days on the low side, the Dow Jones is still holding comfortably in bull country with price action north of the 50-day Exponential Moving Average (EMA) near 43,490.

A near-term bearish drag on index prices may be running out of runway in short order. The Dow Jones has put in a stellar track record over the past 12 months of outrunning its own moving averages. Bidders will likely be looking to re-enter the fray once bids make contact with the 50-day EMA. However, a snap below the last swing low into the 43,000 handle could see a fresh round of bearish momentum.

Dow Jones daily chart

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

Next release: Wed Dec 18, 2024 19:00

Frequency: Irregular

Consensus: 4.5%

Previous: 4.75%

Source: Federal Reserve

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