US 30 – Daily Chart
The US 30 saw its largest consecutive run of daily losses in years last week and a sharp selloff has led to a bounce back to test 42,000. The next two weeks will be important to see if stocks can end the year, or start 2025, in weakness or in strength. Further support below is at the 41,381 and 40,000 levels.
The US industrial index can be an indicator of foreign investor appetite for US stocks. Many overseas investors want to own the trophy stocks in the 30-strong index.
The latest moves could highlight fears that overseas investors have with the Donald Trump administration. Volatility in the US dollar may have also created some negative sentiment.
Stocks rebounded on Friday after a dovish US PCE report, while the threat of a government shutdown also receded. Investors felt that Wednesday’s post-FOMC meeting selling may have been overdone. Fed Chair Jerome Powell disappointed markets by saying that the central bank would cut rates only twice in 2025, after signalling four cuts previously.
Stocks were hurt by the threat of a government shutdown at midnight Friday if Congress could pass a stop-gap funding bill. It was also a worrying sign that a Republican-controlled House could not pass the Trump-approved funding bill Thursday. That could highlight further political impasse in the coming years.
Any extended government shutdown would have negative consequences for US economic growth. Further stock losses came on Trump’s threat on Friday to hit the EU with tariffs if it doesn’t engage in large purchases of US oil and gas.
The threat of tariffs has been louder since the election and may be why overseas investors are selling stocks in the Dow Jones index.
Friday’s weaker-than-expected PCE inflation report, which saw November prices rising by +0.1% m/m and +2.4% y/y, does help to put a little pressure on the Fed’s plans.