Dow Jones Index Dares to Sustain Rhythm, But September Has A Mouthful

Summary:
• The Dow Jones Index activity resumed on Tuesday, but there's a good chance that stocks won't maintain the previous momentum. We tell you why.

The Dow Jones Industrial Average index hit a record high of 41,585 points on Friday, and the new week presents a mixed basket for US stocks. Markets remained closed on Monday in the US for the Labor Day, and the resumption of action on Tuesday comes with a focus on the US Non Farm Payrolls data set for release on Friday.

The August NFP data is largely seen as the last piece in the Fed interest rate puzzle, and will have implications on market sentiment around the US economy. The elephant in the room is whether the stock markets will maintain their upbeat momentum in September- a historically difficult month, amid rising political pressures from the US Elections.

FOMC members will meet in mid-September to announce a Fed’s interest rate decision, expected to be the first interest rate cut in four years. However, the “September effect” could also play out, September has been on average the worst-performing month in the stock market in the last century, and the tepid sentiment surrounding Nvidia’s (NASDAQ: NVDA) quarterly latest earnings release could be the spark that ignites the fire.

Also, the month will see the first US Presidential Debate between Donald Trump and Kamala Harris, and their pronouncements will likely impact the markets. That said, the near-term momentum on Tuesday will be influenced by US Purchasing Managers Index (PMI) readings from Standard &Poor and Institute of Supplies Management (ISM).

Dow Jones today

The momentum on the Dow Jones Index calls for continuation of the upside above the 41,250 mark. That will likely see the first resistance encountered at 41,548. However, further control by the buyers could extend gains to test the next barrier at 41,830.

On the other hand, a move below 41,250 will signal bearish control, in which case the first support willl likely be at 41,025. However, extended control by the sellers will enable them to break below that level, at which point the upside narrative will be invalid. Also, that could see the DJI test 40,720.