As Traders Focus On Trade, Dow Could Potentially Fall To $24,500

The Dow Jones Industrial Average is one of the largest indices in the world. The companies that make the index have a combined market capitalization of more than $23 trillion dollars. The biggest of them is Apple which has a market valuation of $953 billion while the smallest is the Travelers Group which has a market cap of $34 billion.

This week, the Dow fell from a high of $24,888 and reached a weekly low of $24,240. The decline was associated with the problems in Italy when the president refused the nomination by the two populist parties.

Yesterday, the index jumped as these problems eased. It jumped from $24,240 and reached an intraday high of $24,714. This move was an expected one because as shown below, the index was in an increasingly oversold position. From a fundamental standpoint, they had overestimated the impact of the Italian politics.

Today, the index could see some declines as markets shift their focus to trade. On Monday, it was reported that the Trump administration would go on with placing the tariffs on Chinese goods. The news came before Wilbur Ross departed for China to negotiate on trade. Yesterday, it was reported that the US would go ahead with tariffs for the EU. US and EU were trying to hammer a deal. And, Canada sounded open to exiting NAFTA if the deal was not in its own interest. Therefore, markets should expect the Dow to potentially fall to the $24,500 level.

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