The Dow Jones Industrial Average (DJIA) is currently experiencing some sideways movement in early October as geopolitical concerns affect risk appetite. Investors are positioning themselves ahead of the release of the US Nonfarm Payrolls (NFP) jobs data on Friday, with potential future rate moves from the Federal Reserve (Fed) dependent on labor figures.
The US ADP Employment Change figures for September surpassed expectations, with 143,000 net new jobs added during the month. This exceeded the median forecast of 120,000 and the revised August figure of 103,000. Despite the positive advance jobs numbers, investors are awaiting the official NFP data on Friday to make their decisions.
Fed Chair Jerome Powell has indicated that the 50 basis points rate cut in September does not necessarily signal further extreme rate moves. The Fed’s own outlook anticipates only another 50 basis points in total over the next few meetings. Rate markets generally align with this projection, with a 60% chance of a 25 basis points rate cut in November, according to the CME’s FedWatch Tool.
In addition to Fed rate cut expectations, concerns about domestic manufacturing have emerged due to a port worker strike affecting the movement of goods along the East and Gulf Coasts. Tensions in the Middle East are also a factor, particularly following Iran’s missile strike against Israel in response to Israel’s actions in Lebanon. Investors are monitoring the situation to see how it unfolds.
Looking at individual securities within the Dow Jones, Salesforce (CRM) has rebounded from a recent decline and is up 4% on Wednesday, while Nike (NKE) has experienced a plunge, dropping over 6% to under $84 per share. Nike’s poor earnings report for the first quarter of 2024 and CEO transition have contributed to the stock’s decline.
From a technical perspective, the Dow Jones is in a consolidation phase between 42,400 and 42,200 on daily candlesticks. The index’s recent rally and overbought condition suggest that short pressure may push prices towards the 50-day Exponential Moving Average (EMA) near 41,100. Overall, investors are closely watching developments in the market and geopolitical landscape to make informed decisions about their portfolios.
