Dow Jones Index: More Woes to Come from Powell's Speech?

Summary:

The Dow Jones index is down today as worries of further rate tightening pervades the market ahead of Thursday's speech by Fed Chair Powell.

The Dow Jones Industrial Average is trading lower as worries of more aggressive tightening by the Fed continue to weigh on investor sentiment. With just over two weeks to the next interest rate decision, the Dow Jones index is down 0.21% as of writing.

However, the bulls have clawed back some gains following a surprise increase in the ISM Services PMI data released within the hour. With polled economists expecting a drop from 56.7 to 55.4, data showed that the index tracking the business activity in the US services sector improved slightly to 56.9.

The two-percentage-point increase was not enough to reverse the Dow’s losses, but they have helped to keep the Dow above critical resistance at 31282. The current week is relatively sparse regarding market-moving economic news from the US. Instead, it will be dominated by central bank action from Australia, Canada and the Eurozone.

However, there will be some Fedspeak that will cause some market volatility. This will come from Fed Chair Jerome Powell, who will participate in a moderated discussion at the Cato Institute’s Annual Monetary Conference on Thursday via satellite. Fed Reserve Governor Christopher Waller and Kansas Fed President Esther George will also speak at separate events.

Dow Jones Index Outlook

The 31282 support is under threat due to the intraday violation of this price mark. A breakdown of this pivot is required for the bears to aim for downside targets at 30627 (22 June 2022 low) and 30100 (20 May and 15 July 2022 lows). Further price deterioration gives the bears access to 29670 (17 June 2022 low), leaving 28969 as a potential harvest point if the price drops further.

This outlook is invalidated if the bulls force a bounce on 31282. This makes 31733 (27 July low) the immediate northbound target. 32464 (8 March and 3 August lows) and 33370 (3 May and 3 June highs) form additional targets to the north if the bulls uncap the 31733 resistance. The 25 February and 4 May highs form a potential harvest point for the bulls at 34084.