Dow Stuck Ahead of Friday’s Jobs Report & Next Week’s Tariff Time-Bomb

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  • The Dow Jones tracked sideways ahead of Friday’s jobs report.
  • Adding to the risky outlook for the Dow, fresh tariffs are set to go into effect on December 15th.
  • All of this equates to a potentially turbulent weekend for Wall Street.

Caution was the name of the game for the Dow Jones on Thursday, as the stock market bellwether leaned sideways ahead of Friday’s jobs report.

With trade war talks going down to the wire to remove December’s planned tariffs, Dow bulls appear reluctant to load up on risk ahead of what could be a turbulent weekend.

Dow Jones Frozen Ahead of Friday’s Jobs Report

Souring risk appetite sent all three of the major US stock market indices sideways on Thursday, with the Dow Jones Industrial Average (+0.07%), Nasdaq (+0.01%), and S&P 500 (+0.12%) all bouncing around their previous closes.

At last check, the Dow had gained 18.2 points to settle at 27,667.98.

Dow Jones, Stock Market, Donald Trump, Trade War, Tariffs,
The Dow failed to post meaningful gains on Thursday as Wall Street remained on the sidelines ahead of Friday’s jobs report and next Sunday’s latest round of tariffs. | Source: Yahoo Finance

The price of gold rose 0.16%, erasing a small portion of Wednesday’s dip, while crude oil tracked sideways with no inventory data to catalyze a move.

Two weak US ISM readings earlier in the week, alongside a miss in ADP non-farm employment, have raised concerns about the strength of Friday’s jobs report. Better news was seen today as jobless claims data beat expectations, raising hopes that employment stats might still be solid. But these statistics failed to move the Dow.

Impeachment proceedings are continuing, but their impact on the Dow appears to be extremely limited.

The same cannot be said for trade war headlines, as China’s reluctance to accept anything other than a reduction in tariffs proves to be the primary stumbling block for negotiations at this time.

Stock Market Faces Potent ‘Risk Cocktail’

Focusing on the broader outlook for risk appetite, a team of ING analysts led by Chief Economist Mark Cliffe released a piece of research on Thursday that paints a concerning picture for the global stock market heading into the new year.

Here’s one excerpt:

Financial markets remain in a positive mood, but with the headlines on trade looking less encouraging and the global backdrop and strong dollar acting as headwinds for growth, we are less sanguine on the economic outlook. We continue to forecast sub-consensus growth of 1.4% and expect the Federal Reserve to cut rates twice more in the first half of 2020

Lower interest rates might generally be a support to the Dow, but traders could find this negated if the economy continues to underperform. ING views the current situation for stocks as an explosive “cocktail” of concerns. It may only be a matter of time before bulls start to lose confidence in the macro outlook and market rates start tumbling.

It does not take much to coax market rates lower. Re-heat a US-China trade war, add a pinch of US impeachment concern, toss in another UK vote on Brexit, and then simmer in a mix of corporate angst and 2020 uncertainties. Market rates are then ready to test lower as soon as risk assets judge that the brewing cocktail is toxic enough to call it a day for 2019.

Dow 30: Nike Rallies After Goldman’s Nod of Approval

The Dow 30 was mixed on Thursday, and Boeing’s 0.68% slide kept the overall index from rallying.

Apple (AAPL) stock was once again performing well, rising 1.35 % and providing a much-needed boost to the Dow Jones.

The top-performing stock in the Dow was Nike (+2.2%). The global apparel company basked in the warm glow of an upgrade to “buy” from financial giant and fellow Dow 30 member Goldman Sachs.

Nike and Apple both have significant exposure to China, making next Sunday’s planned tariff escalation particularly relevant for both of these stocks.

This article was edited by Josiah Wilmoth.

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