The Dow Jones fell 183 points on Monday as bulls forget the trade war and focus on what could be a chaotic 2020 election cycle.
A rough day for the US stock market saw the Dow Jones shed 183 points to start the week. Yet again proving to be a lead weight on the index, the Dow’s most heavily weighted stock, Boeing (NYSE:BA), dropped 1.1% as the positive effects of the executive reshuffle fade. Focusing on 2020, Citi market insights anticipate a rebound in business confidence, albeit with some substantial concerns about the 2020 election.
Despite Boeing’s struggles, the Dow Jones kept pace with the other major US stock market indices, as both the S&P 500 and Nasdaq posted losses of 0.6% and 0.7%, respectively.
The price of gold has been rising rapidly as the US dollar struggled. This trend ended on Monday despite further downside in the dollar index (DXY), as XAU/USD headed sideways. It was also a mixed day for crude oil, which also lacked direction. It was a rough day for the cryptocurrency markets, as the price of bitcoin dropped 2% as BTC/USD continues its slide back towards $7000.
Economic data was solid, as the US goods trade balance narrowed, and pending home sales hit expectations with a 1.2% gain.
Optimism dominates on Wall Street, and those forecasting stock market crashes are certainly in the minority. For this reason, weakness in the Dow to start the week has mostly been written off as profit-taking. Still, despite a generally bullish environment for stocks, there is no question that the 2020 election threatens to throw a spanner in the works, as noted in an otherwise encouraging report from financial mega-institution Citigroup:
Barring a notable re-escalation of trade tensions, we expect the stabilization in manufacturing to lead to a bottoming out of global growth in the first half of 2020… With a phase-one trade agreement between the US and China likely to be signed in early January, it is possible that business investment could rebound alongside business confidence. However, we think that rising tax policy uncertainty heading into the 2020 US Presidential election may limit the potential upside.
Leading the concern around the upcoming election is the rise of Bernie Sanders, who appears to have re-taken his spot as a sturdy number 2 in the Democratic field behind Joe Biden and ahead of copy-cat Elizabeth Warren. The left-wing senator from Vermont has a number of policies which are pretty alarming to Dow bulls, with major healthcare reform the most pressing threat to Dow giants like Pfizer and UnitedHealth.
Sanders is also extremely well-funded, and despite a recent uptick in Biden’s woeful campaign coffers, could be very hard to beat down the stretch if things get tight.
As the No. 3 trending topic on Twitter for a period of time Monday morning, momentum is gathering for the Wall Street billionaires‘ arch nemesis.
In a generally weak day for the Dow 30, Boeing stock limped lower and is now up just over 1% on the year. By comparison, the Dow is up 22% year-to-date.
Another problem for the Dow Jones to start the week was a 1.4% dive in Disney (NYSE:DIS). Despite accounting for a staggering 40% of all box office receipts in the US and an encouraging roll-out of Disney+, DIS is not even in the top 5 best performing Dow stocks this year. This begs the question, how much better can things get for Disney?
As has so often been the case this year, a strong performance from Apple (NASDAQ:APPL) shouldered some of the burden, moving 0.6% higher against the general direction of the stock market.