- The DJIA rose 1.47 percent on Friday, recouping some of the six previous day’s losses.
- The Dow lost 2.1 percent last week due to global inflation worries.
- Investors should wait to see if the market rally gains traction.
After trading in red for almost six days, the DJIA price forecast regains some of its previous losses. The index gained more than 466 points to close the second week of May.
However, the Dow finished the week 2.1 percent lower for the seventh week in a row, marking the largest seven-week percentage point drop since April 24, 2020.
Stocks rallied on Friday after Federal Reserve Chairman Jerome Powell said that larger rate hikes were off the table for the time being.
However, the dramatic weekly losses continued, with the Dow in its deepest slide since 2001, as investors remain anxious about the central bank’s ability to control inflation without precipitating a downturn.
Investors were paused by new economic statistics from China, which indicated the country’s lingering damage from previous COVID lockdowns.
The subsequent sell-off, spurred by the war in Ukraine and China’s Covid-19 lockdowns, has been widespread, hitting virtually all assets, from cryptocurrencies and equities to government bonds, leaving investors unclear of where to seek refuge.
After weeks of losses, some investors are holding on to equities or acquiring more, hoping that drops have reached their lowest. Others are preparing for a prolonged period of volatility.
The yield on the 10-year Treasury note in the United States dipped marginally on Monday to begin the new trading week. The benchmark yield fell one basis point to 2.922 percent. The 30-year Treasury bond yield was unchanged. Yields move in the opposite direction of prices, and one basis point equals 0.01 percent.
The shares of Apple increased 3.2 percent on Friday. However, Nike (NKE) was the greatest Dow Jones winner today. It increased by 4.7 percent. On the other hand, Johnson & Johnson (JNJ) led the decline, but only by 0.6 percent.
DJIA key events
Today, New York Fed President John Williams will speak at 8:55 a.m. ET.
This week, investors will continue to hunt for indications on the Fed’s interest rate hike path in economic reports and remarks from Fed members.
For the time being, the market anticipates a half-point increase in June, another in July, and maybe a third in September.
Dow Jones Price Technical Analysis: Remains bearish for now
The DJIA price forecast remains bearish despite the recent recovery on Friday. The daily chart shows a bearish momentum. The price is below the 20, 50, 100, and 200 SMAs.
DJIA is now hitting the 32196.67 level. A fall below 32020.19 will bring the index towards the 31852.78 support level. If the Dow falls below this level again, it will challenge the next support level at 31639.00.
On the upside, the index can go towards the next resistance level, around 32437.07. A break over 32796.39 will pave the door for a test of the following resistance level of 33086.80.
