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Dow Jones Flashes Red As Nvidia Fever Grips Equities

The Dow Jones Index dropped on Friday, snapping a four-day winning streak as investors reacted to declines in AI stocks led by Nvidia. The Index was down by 0.06 percent at the time of writing to register 36,161 points as the New York session neared its end. The Dow’s decline came on a day when the US PMI figures for June signaled robustness in the US economy, alleviating the impact of Tuesday’s weak Retail Sales data.

Nvidia, which has established itself as the undisputed leader in the AI sector, had expanded beyond its niche industry to become the US equity markets bellwether for the most part this year. That had seen it rise past Apple and Microsoft to become the world’s largest company by market capitalization in a matter of weeks, with its market cap hitting $3.34 trillion on Tuesday.

However, the return from the Juneteenth holiday has proven rough for Nvidia, with its share price having declined by more than 6 percent in the last two sessions of the week. While Nvidia is not part of the 30 stocks that make up the Dow Jones Index, its eminent role in the tech sector has been setting the tone in the wider equities markets and defining the market sentiment for most of the year.

The Dow Jones Index’s largest stock by weight, Microsoft, returned to winning ways after two sessions of losses and was up by 0.7 percent at the time of writing. Another tech giant, Apple, was up by 0.23 percent, also recovering from a two-session losing streak. Home Depot was up by 0.35 percent, while the Dow’s largest stock by weight was flat-lined. Goldman Sachs was down by 1.3 percent, underscoring the Index’s mixed fortunes on the last trading day of the week.

Technical analysis

The momentum on the Dow Jones Index is currently neutral-to-bearish-leaning, with the pivot likely to be at 39,100.  The upside will likely continue if the buyers keep the Index above the pivot mark, and the first resistance will likely be at 39,185. A break above that mark could build the momentum to hit 39,215. On the downside, a breach of the 39,100 pivot could signal control by the bears, with the first support likely to be established at 39,050. If the sellers break below that mark, it will likely render the upside narrative invalid, and could result in an extended decline to test 38,985.