Dow Jones and SPY Trade Lower, Retail Data Disappoints

All of the major indexes and ETFs are trading lower today. The Dow Jones Industrial Average has fallen by 44 points or 0.16% at the time of this writing. The S&P 500 is also trading 0.1% lower. XLK, SMH, and SOXX have fallen 0.7%, 0.2%, and 0.16%, respectively.

The Dow Jones ETF (DIA) is trading lower. Notably, DIA has gained 3.6% since October 2. Investors’ optimism rose as trade talks between the US and China resumed. However, the optimism was short-lived. China said it needs to re-evaluate the deal before it makes a decision.

Now, investors are treading cautiously. The retail data in the US fell 0.3% in September compared to August. According to a Trading Economics report, retail sales fell in September for the first time since February.

Retail trade was impacted “mainly due to lower sales at motor vehicles, building materials, hobbies and online purchases.” The report said that seven of the 13 major categories fell last month.

Among the 30 stocks in the Dow Jones Index, 19 are trading lower today. The top laggards include tech giants like Apple (AAPL), Intel, Microsoft (MSFT), and IBM. They have fallen 0.6%, 0.6%, 1%, and 0.8%, respectively. The other top losses in DIA are United Health, Visa, and Verizon. They have fallen 1.3%, 0.9%, and 1%, respectively.

Apple stock has been trading lower over the last two days. The stock rose to an all-time high and reclaimed its trillion-dollar valuation. United Health gained 8.5% on Tuesday after strong September quarter results. Now, the stock has pulled back due to overall market weakness.

Apple still leads the gains in the Dow Jones Index in 2019. So far, the stock has risen 48.4% YTD (year-to-date). The other top gainers in DIA are Microsoft, Visa, and Home Depot. They have risen 38.3%, 34.2%, and 36.8%, respectively, in 2019. DIA has risen 15.7% YTD. The ETF is trading 1.5% below its record high.

The top five holdings in the S&P 500 ETF (SPY) are Microsoft, Apple, Amazon, Facebook, and Berkshire Hathaway. While Apple and Microsoft are trading lower, Amazon stock has risen 0.8% today.

Facebook has fallen 0.6%, while Berkshire Hathaway has risen 0.23%. The top five holdings account for 14.8% of SPY. The ETF has gained 19.5% YTD. SPY is trading 1.2% below record highs.

Will the Dow Jones and SPY continue to rise in the fourth quarter? The Fed might lower interest rates and stimulate growth. Another interest rate cut and any progress in trade talks will keep investors interested.

However, global growth has been impacted. The PMI data for several geographies, including the US, point to a contraction. Investors can expect DIA and SPY to remain volatile and range-bound as we head into 2020.