The Dow Jones Industrial Average Declines
- The Dow Jones fell seven-tenths of a percent on Friday.
- Stocks are paring back recent election-fueled gains.
- US Retail Sales beat forecasts, but still grew by a smaller amount in October.
As the week came to a close, the Dow Jones Industrial Average (DJIA) experienced a decline, shedding over 350 points at its lowest and giving back roughly 0.85% as investors grapple with an increasingly uncertain future. Despite US Retail Sales surpassing expectations, there was still a slight pullback from previous figures. Additionally, Federal Reserve (Fed) Chair Jerome Powell dampened hopes of further rate cuts by reiterating that the Fed was not rushing to lower interest rates.
Post-Election Market Trends
The post-election “Trump rally” is beginning to unwind as potential candidates for key official positions in the upcoming administration are leaked. A surprising development occurred in pharmaceutical stocks as vaccine skeptic Robert F. Kennedy Jr. was announced as a nominee for the head of the US Department of Health and Human Services. This unexpected choice, combined with plans to ban certain vaccines and health products, contradicts the initial market optimism following the election.
US Retail Sales Performance
In October, US Retail Sales saw a 0.4% month-over-month growth, slightly exceeding the forecast of 0.3%. However, Core Retail Sales, which exclude automobile purchases, fell short of expectations with a minimal 0.1% increase compared to the anticipated 0.3%. This was a decline from the previous month’s revised figure of 1.0%.
The Dow Jones in Focus
Despite significant losses in key equities, the Dow Jones remained relatively balanced on Friday, with roughly half of the listed stocks showing gains for the day. Disney’s stock rose by 5.3% to $115 per share, outperforming expectations, while Amazon and Amgen both experienced declines of around 4.5%.
Price Forecast for the Dow Jones
Although the Dow Jones extended its bearish trend on Friday, there is still room for further downside movement before technical indicators suggest a shift. Investors remain hopeful of maintaining record high territory, with potential for bullish pressure to reemerge at any time.
The Dow Jones is expected to end the week with a 1.3% decrease, despite reaching a new all-time high bid earlier in the week. The nearest technical barrier is the 50-day Exponential Moving Average (EMA) near 42,430.
Fed FAQs
Monetary policy in the US is steered by the Federal Reserve (Fed), with the primary goals of achieving price stability and fostering full employment through interest rate adjustments. The Fed’s actions impact the strength of the US Dollar and can influence borrowing costs and economic conditions. In extreme cases, the Fed may implement Quantitative Easing (QE) or Quantitative Tightening (QT) measures to address financial crises or low inflation.