Dow Jones Ends Volatile Week in Red

The Dow Jones Industrial Index (or DJIA) fell 0.4% or 114 points in the last week. The DJIA is currently trading 2.1% below its 52-week high. Here we look at the Dow performance in the last week.

The index gained a marginal 0.06% on Monday despite grim economic data from Europe. Data from Trading Economics showed us that Eurozone’s PMI (purchasing manager index) came in below estimates.

The IHS Market Eurozone PMI fell to 45.6 this month. This is compared to 47.0 last month and below estimates of 47.3. A PMI score below 50 points to a contraction in the economy. This fall in PMI was Eurozone’s steepest since December 2012. According to the Trading Economics report, sluggish export sales drove it down.

Trump impeachment proceedings impact Dow Jones

On September 24, President Donald Trump said that he will not accept a half-baked trade deal with China. He slammed China in his speech at the United Nations General Assembly. Also, Trump warned Iran of additional sanctions if tensions continue to rise in the Middle East.

But the big news on Tuesday was Trump’s impeachment proceedings. President Trump asked his Ukrainian counterpart President Volodymyr Zelensky to look into Joe Biden and his son’s business dealings. The call transcript was released on Wednesday. The Dow Jones Index was up 0.6% on September 25 after impeachment proceeding began against the US president.

Why did Dow Jones fall yesterday?

The Dow Jones Index was down 0.26% or 71 points on September 27. The investors were spooked about the White House making a new economic policy to exert further pressure on China.

According to this Bloomberg report, “Trump administration officials are discussing ways to limit U.S. investors’ portfolio flows into China in a move that would have repercussions in billions of dollars in investments pegged to major indexes, according to people familiar with the internal deliberations.”

The report says that the White House might look to delist China’s ADRs (American Depository Receipts). This means that stocks like Alibaba (BABA), JD.com (JD), Sina, Baidu (BIDU), and others will not be available to trade on US exchanges.

Almost all Chinese stocks fell in the second half of September 27, 2019. The recent escalation between the two largest economies in the world might drag the index lower on Monday as well.

How did top DJIA holdings perform in the last week?

The top five holdings of the Dow Jones index are Boeing (BA), Home Depot (HD), Apple (AAPL), UnitedHealth Group Incorporated (UNH), and McDonald’s (MCD). Boeing accounts for 9.7% of the Index. This is followed by HD at 5.8%. Apple, UnitedHealth Group, and McDonald’s account for 5.5%, 5.4%, and 5.4%, respectively. The top five holdings constitute 31.85% of the DJIA.

In the last week, Boeing rose 0.91%. HD, Apple, UnitedHealth Group, and McDonalds returned 2.3%, 0.5%, -7.6% and 1.8%, respectively.

The lower market sentiment in manufacturing in Europe is impacting broader markets. Also, the impeachment proceedings on Trump isn’t helping. Further, investors can expect the market to trade lower following the latest announcement on China’s investments.