- The Dow Jones collapsed more than 1.85% on Friday from Pico to Valle.
- The US NFP employment figures arrived well below expectations along with drastic reviews.
- A trembling labor market has revived the hopes of more fed feat cuts soon.
The Dow Jones industrial average (DJIA) collapsed almost 2% from top to bottom on Friday, falling more than 800 points from the closing offers on Thursday at its lowest point. Variable rental markets are struggling to recover their stability after a disappointing report of non -agricultural payroll (NFP) that showed that the US added much less jobs in July than expected.
The Dow Jones fell to a minimum of five weeks, playing 43,330 for the first time since the end of June and facing a technical congestion in the Exponential Mobile (EMA) average of 50 days about 43,600. The main stock market index had its worst week since the Trump administration announced global tariffs in early April, and the Dow has dropped more than 3% since Monday opening offers about 45,000.
NFP down, hopes for cutting up rise
The NFP NFP employment gains of the United States slowed drastically in July, falling to 73K during the month, well below the expected 110k. In addition to the downward figure, the previous months saw a strong downward review, with May reviewed in 125K to 19K and the June NFP adjusted to scarce 14K. The reviews eliminated more than 250k of net increases in book employment in two months, carrying the net NFP employment increase from the US NFP to only 104K in a period of three months, with more expected reviews in the coming months.
With a strong downward review in the US labor perspectives now on the table, the markets are again betting on a federal reserve rates (FED) in September. The markets had backed up in the expectations of cutting rates after the Fed maintained stable interest rates earlier this week, citing the need to monitor additional employment and inflation data. According to the CME Fedwatch tool, rates markets are now valuing more than 80% probabilities of at least one quarter of a point on September 17, compared to 45% probability valued before the publication of the NFP on Friday.
Despite a pronounced deceleration in what was considered a healthy labor market until Friday, the US is still dealing with a general deterioration in economic data in general: inflationary pressure, mainly due to possible tariff impacts, continues to affect the margins of general inflation indicators, and feeling surveys both at the business level and consumer are beginning to launch.
The underlying economic conditions increase concerns about employment
The purchasing managers index (PMI) EE.UU MANUFACTURERO DE JULIO fell to 48.0, marking the fifth consecutive month below 50.0, with most of the companies surveyed hoping to see worse hiring conditions through August. As the Supply Management Institute (ISM) pointed out, companies saw a general increase in orders and general demand, but companies are still reducing their contracting practices and actively managing the number of employees.
According to the ISM, 79% of the production of the Gross Domestic Product (GDP) of the US manufacturing sector contracted in July, a drastic increase from 46% of June, since companies continue to restrict their hiring and investment plans. Uncertainty in commercial policy remains a key thorn in the side of the US economy, even when the Trump administration continues to play with tariffs intermittently.
The term of August 1 of President Donald Trump on import taxes has become another complicated delay. President Trump announced early on Friday that tariffs, which should go into force at midnight on Thursday, will now begin on August 7 while the Trump team continues to try to negotiate trade agreements with other countries, with doubtful results so far.
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Dow Jones – Frequently Questions
The Dow Jones Industrial Avenge, one of the oldest stock market indexes in the world, consists of the 30 most negotiated values in the United States. The index is weighted by the price instead of capitalization. It is calculated by adding the prices of the values that compose it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader rates such as S&P 500.
There are many factors that promote the Dow Jones Industrial Average (DJIA) index. The main one is the added performance of the companies that compose it, revealed in the quarterly reports of business benefits. The American and world macroeconomic data also contribute, since they influence investor confidence. The level of interest rates, set by the Federal Reserve (FED), also influences the DJia, since it affects the cost of credit, on which many companies depend largely. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Dow’s theory is a method to identify the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Avenge (DJIA) and the Dow Jones Transportation Average (DJTA) and just follow the trends in which both move in the same direction. The volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. Dow’s theory raises three phases of the trend: accumulation, when intelligent money begins to buy or sell; Public participation, when the general public joins the trend; and distribution, when intelligent money abandons the trend.
There are several ways to operate with the DJ. One of them is to use ETF that allow investors to negotiate the DJ as a single value, instead of having to buy shares of the 30 companies that compose it. An outstanding example is the SPDR Dow Jones Industrial Avenge ETF (day). Future contracts on the DJ allow the specular operators about the future value of the index and the options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Investment funds allow investors to buy a part of a diversified portfolio of DJ values, which provides exposure to global index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
