Dow Industrials: The force is weak with this one
Main U.S. equity index futures red: Dow off ~0.8%
Initial jobless claims 219k vs 218k estimate
Continuing claims 1.791M vs 1.797M estimate
Q1 GDP 2nd estimate 1.3% vs 1.3% estimate
Q1 GDP Deflator Prelim 3.1% vs 3.1% estimate
Q1 Core PCE prices prelim 3.6% vs 3.7% estimate
Euro STOXX 600 index up ~0.4%
Dollar, crude dip; gold gains; bitcoin up >1%
U.S. 10-Year Treasury yield falls to ~4.57%
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DOW INDUSTRIALS: THE FORCE IS WEAK WITH THIS ONE
It appears that the Dow Jones Industrial Average .DJI fought a losing battle when it hit 40k. Indeed, once again, the Dow has found round number resistance to be a bit of a Darth Vader, that is, one imposing figure.
On May 17, with its 40,003.59 record closing high, the blue-chip average managed to eke out one finish above this barrier. On May 18, the Dow extended to an intraday record of 40,077.44.
Since that intraday high, the Dow has tumbled as much as 4.1% in just six trading days. Meanwhile, the S&P 500 index .SPX is off just 1.4% from its May 23 intraday record high.
And now with shares of Dow component Salesforce CRM.N sliding more than 16% in premarket trade, on its downbeat Q2 revenue forecast, the blue-chip average is poised to be blasted at Thursday's open.
E-mini Dow futures 1YMcv1 are suggesting the DJI is set to fall around 300 points when the regular session kicks off, of which CRM will be responsible for roughly all of that.
In any event, on Wednesday, the Dow ended at 38,441.54, putting it below both its 50-day moving average (DMA) (~38,900), and its 100-DMA ~(38,660):
In terms of the next support, it appears that the April-May lows in the 37,611-37,780 area are at risk.
Breaking these lows can suggest the potential for a much deeper decline.
The next significant support would be in the 37,122-36,750 area which includes the January 18 low, the 38.2% Fibonacci retracement of the October-May advance, and the rising 200-DMA.
The October 2023 intraday trough was at 32,327.20.
Bulls will want to see the DJI quickly reclaim its 50-DMA to suggest pressure is coming off the downside.
(Terence Gabriel)
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FOR THURSDAY'S OTHER LIVE MARKETS POSTS:
PRIORITISE LIQUIDITY NEEDS WHEN RATES COME DOWN - UBS - CLICK HERE
POSTCARD FROM MILAN BANK TOUR: "VERY CONSTRUCTIVE" - CLICK HERE
STOXX STEADIES ON DEFENSIVE SUPPORT - CLICK HERE
EUROPEAN FUTURES POINT TO ANOTHER DOWN DAY - CLICK HERE
BIDING TIME BEFORE THE DATA DUMP - CLICK HERE
DJI05302024B https://tmsnrt.rs/4bVYEic
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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