Dow Jones Industrial Average surges on soft US NFP data, Fed easing hopes rise

• Dow climbs 0.71%, rebounding as softer data fuels rate-cut speculation.
• S&P 500 and Nasdaq follow, both gaining over 0.6% amid broad optimism.
• Amazon shines with 6.5% rise; Apple lags with 1.5% drop on weak China sales.

The Dow Jones Industrial Average (DJIA) posted solid gains of close to almost 300 points or 0.71% on Friday, on softer-than-expected economic data, reinforcing investors' hypothesis of further easing by the Federal Reserve. Wall Street made a U-turn following Thursday’s losses and rallied sharply ahead of the weekend.

Data revealed by the US Bureau of Labor Statistics (BLS) showed that strong hurricanes and union strikes distorted Nonfarm Payrolls in October. The US economy created 12K jobs, below the 113K estimated. Despite this, the unemployment rate remained at 4.1%, as traders braced for other data.

The Institute for Supply Management (ISM) recently revealed that manufacturing activity fell for the seventh consecutive month, hitting its lowest level since July 2023. The ISM Manufacturing PMI dipped from 47.2 to 46.5, missing forecasts of 47.6.

Meanwhile, Wall Street posted solid gains, with the S&P 500 following the Dow Jones’ upward path, gaining over 0.63% to 5741.45, while the Nasdaq climbed 0.75% up to 18,230.29.

Next week, the US economic docket will be busy with the US Presidential Elections on November 5. Traders will also be eyeing the Federal Reserve’s monetary policy on November 6-7 and will scrutinize Fed Chair Jerome Powell's speech.The CME FedWatch Tool shows odds for a 25 bps rate cut by the Fed reaching 95%, down from 97% a day ago. This would leave rates in the 4.50%-4.75% range.

Dow Jones news

In stock news, Amazon (AMZN) is up 6.5%, bolstered by strong retail sales, which lifted its profits above estimates. Apple (APPL) was hit by a drop in sales in China and fell 1.5%, while Chevron (CVX) exceeded estimates on profits per share, production, and sales. Meanwhile, Boeing (BA) shareholders were relieved as the stock climbed 3%, and the ongoing strike is nearing an end.

The stocks leading the pack in Dow Jones are Intel (INTC), up 6.92% at $23.01 a share, closely followed by Amazon, up 6.02% at $197.62, and Boeing, up 2.99% at $153.77. The laggards are Apple shares, down 1.63% at $222.22; Verizon (VZ), losing 1.51% at $41.50; and the Dow (DOW), with its share price at $48.87, losing 1.03%.

Dow Jones price forecast

The Dow Jones Industrial Average has risen above 42,000 after hitting a weekly low of 41,692 below the 50-day Simple Moving Average (SMA) at 41,943. Initially, this increased the chances to challenge the September 2 high turned support at 41,564 ahead of the 41,000 area. However, buyers emerged and lifted the US equity index higher ahead of next week’s US Presidential Elections.

If the Dow Jones posts a daily close above 42,000 buyers, it could remain hopeful of challenging the October 30 low, which turned resistance at 42,122. Once cleared, the next stop would be October 31, high 42,460. On further strength, 42,500 could be reached before testing 43,000.

Momentum is bearish, with the Relative Strength Index (RSI) remaining below its neutral line. But, in the short-term, a small spike threatening to cross the neutral line hints that buyers are gathering steam.

Dow Jones daily chart