Dow Jones Industrial Average (DJIA)

• As expected, US stock indexes continued its upward trend last week and gained over 1%, with the S&P 500 and DJIA hitting record highs and the NASDAQ at just below its recent peak. November was a strong month, with the DJIA up 7.5%, NASDAQ 6.2%, and S&P 500 5.7%, recovering from October's decline. President-Elect Trump's tariff threats against China, Canada, and Mexico raised trade tensions, impacting currencies and automaker stocks. Looking forward, 4Q earnings for S&P 500 companies are expected to grow 12.0%, double 3Q's 5.8%, marking the strongest growth in three years.
• Looking ahead, investors will closely monitor this week's economic data, particularly Friday's monthly labor market report, to gauge the health of the U.S. economy. The report is expected to show a rebound in November's job growth, with non-farm payrolls projected to rise by 200,000, following October's weak gain of 12,000 due to hurricanes and strikes. The unemployment rate is anticipated to hold steady at 4.1%, reflecting a labor market that remains robust yet gradually cooling. These figures will provide investors insights into inflation trends and the likelihood of a December rate cut by the Fed. Additional key data releases include manufacturing activity, consumer sentiment, and factory orders, which will provide further context for economic conditions.
• Technically, the benchmark index remains in an uptrend, holding firmly above its key SMAs (5, 13, 50, and 200-week), signalling bullish momentum. However, divergences in stochastic and RSI indicators, along with a near-peak smart MCDX, suggest potential near-term consolidation.
• In short, we expect the market to consolidate with downside bias this week. Key support levels are at 43,353 (5-week SMA) and 41,763 (13-week SMA), with resistance at 45,071 and the psychological 46,000 level.

Source: Kenanga Research - 2 Dec 2024