The Dow Jones Industrial Average (DJIA) shed around 400 points on a quiet Friday. Most investors are still out of the markets on holidays and thin volumes have left the Dow Jones roughly a full percent lower.
Holiday market flows are in full swing in equities, with a broad-base cooling effect in the long-run tech rally as investors pull up stakes and do some light profit-taking ahead of the rollover into the new year. A thin data release schedule this week, followed by another midweek holiday next week, leaves equity indexes on the tepid side in the near term.
Traders are still grappling with the Federal Reserve’s (Fed) recent pivot into expectations of less rate cuts in 2025 than previously expected. According to the Fed’s latest Summary of Economic Projections (SEP), policymakers only expect another two quarter-point rate cuts through next year, hobbling market expectations for a steeper decline in the headline reference rate.
Despite an overall blustery year that saw the Down Jones climb nearly 21.5% bottom-to-top, the major equity index still got coal in its stocking as December turns deeper into the red and pares away November’s heady gains. All but five of the Dow’s listed securities are testing into the red on Friday, with losses led by Nvidia (NVDA), which fell over 2% and is back below $137 per share.
Nvidia appears to have shrugged off recent reports that its latest Blackwell AI-focused chipset may have experienced an overheating problem, but fresh woes for the AI-fueled tech rally have cropped up as investors weigh the prospect of stiffer restrictions on Chinese access to US-manufactured silicon solutions. An outsized amount of Chinese demand for recently-developed AI-focused chipsets could leave profit expectations for Nvidia in the lurch if regulations hamper trade.
The Dow Jones’ stellar 2024 run appears to be taking a breather after declining for three consecutive weeks. The DJIA is down nearly 5% from record highs above 45,000, testing the waters just south of the 43,000 handle.
The Dow Jones has fallen below its 50-day Exponential Moving Average (EMA) near 43,345 for the second time in as many months, but price action is still holding well above the 200-day EMA near 40,960 after bids found a technical floor near 42,000.
Source: FXS
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