- Dow Jones fell another 1,300 points from Friday’s close.
- Markets are recoiling amidst concerns of an escalation in Middle East conflicts.
- Souring US economic data is increasing concerns of a wider economic slowdown.
The Dow Jones Industrial Average (DJIA) extended into a third straight day of downside momentum as equities plunge in the face of a bad batch of US economic figures signalling the growing possibility of a harder, deeper recession than most investors were prepared for in the coming months. Geopolitical tensions are also on the rise, further batting down risk appetite as the Israel-Palestinian Hamas conflict looks set to widen with the possible involvement with Iran.
Last Friday’s US Nonfarm Payrolls (NFP) would have been a good print in years past, but that was then and this is now. The lowest initial print in the number of net jobs additions since 2019 sent shockwaves through investor markets, dragging down equities and sparking fears of a broad recession over the horizon for the US economy. Monday accelerated losses, sending all US sectors and indexes into the red.
The US S&P Global Services Purchasing Manager Index (PMI) for July eased to 55.0 from the expected hold at 56.0, and July’s Composite PMI also ticked down to 54.3 instead of the forecast flat hold at 55.0. Still, a glimmer of hope on the data front: the ISM Services PMI for July rose to 51.4 on Monday, beating the forecast increase to 51.0 from the previous 48.8.
After the assassination of two of Iran and Hezbollah’s militant leaders last week, markets are bracing for an expected escalation in the Middle East conflict that has been bubbling for months. Iran is expected to retaliate directly against Israel for its hand in assassinations that took place in Beirut and Tehran, and the US is deploying warships to the region in an effort to stave off a further widening of the conflict.
Dow Jones news
The Dow Jones plummeted to a 1,300 point decline from Friday’s close in early Monday trading as the entire stock index prints in the red. All US sectors are down on Monday, with losses being led by Intel Corp. (INTC), which fell -6.3% and is approaching $20.00 per share after the software company announced a minor miss in second-quarter revenue and slightly lowered forward guidance on revenue for the current quarter.
Dow Jones technical outlook
Monday’s bearish plunge dragged the Dow Jones to an eight-week low of 38,382.90. Bids have fallen with touch range of the 200-day Exponential Moving Average (EMA) at 38,108.94, a feat that hasn’t been accomplished since the DJIA soared back over the long-term moving average in November of last year.
Despite near-term declines dragging the Dow Jones into correction territory, down around -7% peak-to-trough from all-time highs set above the 40,000.00 major price handle, price action still has a long way to go before testing full-on bear country at the 20% contraction mark near 33,108.00.
Dow Jones daily chart
Economic Indicator
ISM Services PMI
The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector, which makes up most of the economy. The indicator is obtained from a survey of supply executives across the US based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that services sector activity is generally declining, which is seen as bearish for USD.
