The Dow Jones Index plummeted by over 500 points on Friday as market participants reacted to the trade news and the latest US non-farm payrolls (NFP) data. It plunged to a low of $43,600, its lowest level since June 27. Here are the top catalysts for the index this week.
US NFP data and BLS chief firing
The Dow Jones Index will continue reacting to the latest release of the US jobs numbers and their implications. Most notably, market participants will react to the firing of the head of the Bureau of Labor Statistics.
The jobs data released on Friday showed that the American economy has deteriorated under Donald Trump. It showed that the US created just 73,000 jobs in July, much lower than what analysts were expecting.
The bureau then downgraded its previous jobs report, implying that the economy has created an average of 35,000 jobs in the last three months.
The Dow Jones Index will also react to the firing of the head of the BLS. Firing the head of the BLS is risky because it may erode the trust of US macro data, which are used in setting interest rates and other policy events.
US tariffs to take effect
The Dow Jones Index will also react to the upcoming implementation of the new tariffs by the Trump administration. For example, the US will begin charging a 15% tariff on European Union (EU) goods. Most of Canada’s goods will be charged a 30% tariff, while Brazil’s goods will be charged as high as 50%.
These tariffs will impact numerous American companies, including those listed in the Dow Jones Index. Many of them will start paying a higher tariff when they ship goods to the US.
The new tariffs may also lead to substantial market volatility as investors react to the risks, especially after the NP data showed that the economy was hurting.
Top corporate earnings
The Dow Jones Index will also react to the upcoming earnings by some of the biggest American companies.
FactSet data indicate that approximately 66% of all companies in the S&P 500 Index have already reported their results. Their blended earnings growth for the index so far is 10.3%, significantly higher than what analysts had expected.
The most consequential companies have published their earnings. This includes the Magnificent 7 companies and the biggest US banks.
Some of the most notable companies to watch will be Palantir, Walt Disney, Uber, Amgen, and Shopify.
Dow Jones Technicals
Technicals will also impact the Dow Jones Index this week. The chart above shows that the index pulled back after reaching the psychological point at $45,011, which was also the highest level in December last year and January.
That is a sign that it has formed the highly bearish triple-top pattern, whose neckline is at $36,627. It also formed a small double-top pattern with a neckline at $43,777.
Therefore, the Dow Jones may remain under pressure this week, and then rebound later.
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