The Dow Jones Index subsided from its all-time highs on Monday, setting the stage for a potential struggle on Tuesday. The Index was down by 0.3 percent at the opening of markets on Tuesday, registering 42,764 points. An extended decline below the 43k points level highlights the mounting concerns over the extent to which the Federal Reserve will slash interest rates in its November meeting.
Investors are increasingly convinced that the Fed will avoid going all in in its interest rate decision next month. According to the CME FedWatch tool, 89.6 percent of traders expect the next rate cut to be 25 basis points. In addition, recent polls have shown that Donald Trump has taken the lead in the race to the White House.
A Trump Presidency will likely usher the return of high tariffs on imports. In addition, his tax and incentive policies are expected to keep interest rates high. With the US elections only two weeks away, the markets will increasingly focus on that front, with repercussions on the Dow Jones Index (INDEXDJX: .DJI)trajectory.
All but seven component stocks of the Dow Jones Index were in the negative territory in the first hour of trading on Tuesday, highlighting mounting downward pressure in the market. Home Depot was down by 2.2 percent, Caterpillar Inc was at -1.1 percent while UnitedHealth Group was at -0.8 percent.
The Dow Jones Index pivot point is at 42,875, and the persistance of resistance at that mark will signal bearish control. The first support will likely be at 42,707, but a persistent downward momentum in the markets will likely break below the that level to test 42,626.
On the other hand, moving above 42,875 will signal control by the buyers. In that case, initial resistance could come at 42,970. However, an extended bullish control could break above that level to test 43,104.
This post was last modified on Oct 22, 2024, 15:39 BST 15:39