Dow Jones Industrial Average churns as post-election rally continues to fizzle

18 Nov 2024, 18:03 by Joshua Gibson · FXStreet

The Dow Jones saw limited momentum in a quiet start to the trading week.
Equities are overall tilted into the high end, but steeper losses in key stocks drag averages down.
Investors get to take a breather from high-impact US data until the end of the week.

The Dow Jones Industrial Average (DJIA) held steady on Monday, testing into new weekly lows but overall keeping a tight grip on the 43,450 region. Market sentiment is grappling with a cooling effect that gripped indexes last week following the recent post-election rally.

After several high-impact prints on the economic calendar last week, traders get a chance to catch their breath with the US data docket on the moderate side until S&P Purchasing Managers Index (PMI) figures for November print on Friday. Mid-tier residential construction starts and permits will be reported on Tuesday, with a couple of outings from Federal Reserve (Fed) officials on Wednesday and weekly unemployment benefits claimants on Thursday.

Dow Jones news

Equities are broadly higher on Monday, with two-thirds of the Dow Jones’ constituent securities climbing from the week’s opening bids. However, losses were concentrated in Nike (NKE) which declined nearly 3% to $74.50 per share. According to analysts, investors are growing concerned that the shoe manufacturer could be looking at downside revisions to guidance in FY 2026 as the footwear giant faces downward pressure from potential US tariffs aimed at China. Tailwinds from an announced increase in Nike cash dividends is getting further crimped by an overall disappointing economic outlook in China.

Dow Jones price forecast

The Dow Jones index is churning chart paper near 43,450, holding steady near familiar lows despite a brief test into fresh lows earlier Monday, softening an approach back toward the 43,000 handle. Despite early November’s post-election splurge, the Dow has steadily declined, shedding 2.77% top-to-bottom from record highs at 44,485.

Despite a near-term swing into the bearish side, the Dow Jones is holding firmly in the bullish end, trading north of the 50-day Exponential Moving Average (EMA). Even if bears maintain control in the immediate window, a one-sided bull run baked into charts since October of 2023 has left price action well north of the 200-day EMA at 40,250.

Dow Jones daily chart

Economic Indicator

S&P Global Services PMI

The S&P Global Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services 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 services economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for USD.