Dow Jones Index: “Tariff Man” Trump is Back


Nov. 11 2019, Updated 10:28 a.m. ET

On November 8, the Dow Jones Industrial Average Index (DJIA) closed at the 27,681.24 level, just 0.3% below its all-time high. The optimism surrounding the US-China trade deal helped equity markets rise last week. On November 8, a Chinese official said that both sides agreed to roll-back a portion of the existing tariff. Moreover, this is a crucial factor for a trade deal, according to the Chinese official. However, on November 9, President Donald Trump denied any plans for canceling the existing tariffs. 

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Today at 7:43 AM ET, the Dow Jones futures shrunk more than 100 points. It suggests a lower opening for the equity index. In today’s trade, the Shanghai Composite Index fell 1.8%. Also, Japan’s Nikkei 225 was down by 0.3%. The rising social unrest in Hong Kong plus concerns about trade deal might have impacted Asian markets. Today, the Vanguard FTSE Asia, excluding Japan Shares Index ETF, was down 1.2%.

Weekly market performance

In the week ending on November 8, the Dow Jones rose 1.2%. It was the third consecutive weekly gain. Moreover, last week’s gains were the second-highest since the week ended September 6.

In the trailing week, among sector-specific SPDR ETFs, the Financial Select Sector SPDR ETF (XLF) gained the most. XLF rose 2.5%. However, defensive and high-dividend yield sectors like the Consumer Staples Select Sector SPDR ETF (XLP), the Utilities Select Sector SPDR ETF (XLU), and the Real Estate Select Sector SPDR ETF (XLRE) declined 0.6%, 3.7%, and 3.7%, respectively. These were the underperformers among sector-specific SPDR ETFs last week.

Defensive and high-dividend yield sectors underperformed, and the equity market is near its all-time high. This might indicate that investors are shifting their holding away from these sectors. Usually, these sectors tend to outperform the broader market during turmoil.

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For instance, in August, the Dow Jones declined more than 1%. Among sector-specific SPDR ETFs, only these three sectors closed in the green territory in the same month. In August, “tariff man” Donald Trump in a surprise move imposed a 25% tariff on $200 billion worth of Chinese goods. To learn more about Trump’s impact on the equity market, read “Tariff Man” Trump Is Back to Haunt the Markets after a Lull. In December 2018, Trump called himself a”tariff man.” 

Dow Jones’ moving averages

On November 8, the Dow Jones settled 2.3%, 3%, 3.6%, and 5.4% above their 20-, 50-, 100-, and 200- DMA (day moving averages), respectively. The index above these key moving averages suggests bullishness in the equity market. Also, this week, investors should watch the 20-DMA at the 27,047 level. If the Dow Jones falls below the 20-DMA, the index might enter into a short-term downturn. Besides, after Trump’s comments, chances are high for a possible decline in the index.


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