The recent post-election rally that saw Donald Trump emerge as a contender for the White House has hit a snag, with the Dow Jones Industrial Average easing back from record highs. Despite initial optimism among investors, the market is now showing signs of slowing down as equities pare back slightly. The Producer Price Index (PPI) figures came in as expected, with a slight increase in annualized core PPI numbers. Looking ahead, US Retail Sales data is expected to be released on Friday, offering further insight into the state of the economy.
Despite the slight easing in the Dow Jones index’s average price, half of its constituent equities are still in the green for the day. Walt Disney (DIS) is leading the gains, up nearly 7% after beating earnings in FY Q4. On the other hand, Salesforce (CRM) is down around 2.5%, as the AI-fueled tech rally takes a breather. The Dow Jones is struggling to hold onto the 44,000 handle, but downside potential remains limited as bears have few footholds to grab onto. A near-term downturn to the 50-day Exponential Moving Average (EMA) near 42,400 cannot be discounted.
Looking at the bigger picture, the Dow Jones is still deeply entrenched in bull territory, with the index on track to close in the green for all but two months of 2024. It is also trading well above its 200-day EMA near 40,150, with almost 10% of value between the current price action and the long-term moving average. The Dow Jones daily chart reflects this overall positive trend in the market, despite the recent easing from record highs.
The Producer Price Index (YoY) released by the Bureau of Labor Statistics measures the average changes in prices in primary markets of the US by producers of commodities in all stages of processing. Changes in the PPI are closely monitored as an indicator of commodity inflation, with a high reading seen as positive for the USD and a low reading seen as negative. The recent PPI figures came in as expected, contributing to the overall mixed sentiment in the market as investors await further economic data to gauge the trajectory of the US economy.
Overall, the Dow Jones is facing some headwinds as it eases back from record highs, but the long-term bullish trend remains intact. The upcoming Retail Sales data release will offer more clarity on the state of consumer spending in the US, which could influence market sentiment moving forward. Despite the recent pause in the post-election rally, investors remain cautiously optimistic about the future trajectory of the market, with eyes on key economic indicators for guidance.
