Dow Jones closed slightly lower as President Trump said he would impose more tariffs on Chinese imports if there was no progress in talks with Chinese President Xi Jinping at the G20 summit that is scheduled for the end of month. Earlier today the U.S. Bureau of Labor Statistics reported earlier that the Producer Price Index (PPI) on a yearly basis dropped to 1.8% in May from 2.2% in April and fell short of the analyst’s expectation of 2%. The core PPI, came in at 2.3% as expected. On a monthly basis, the PPI and the core PPI matched analyst’s estimates with 0.1% and 0.2%, respectively. The Dow Jones 30 finished 0.05 percent lower at 26,048 while S&P 500 also lost 0.03 percent at 2,885. I believe that the longer the trade war goes on, and tariffs are in place against China, the more likely is that the Fed will cut rates. Meanwhile European equities register big gains on the back of hopes for further economic stimulus in China.
The technical picture remains positive for the DJIA as it managed to hold above the 50 day moving average and also stays above the key 61.8% Fibo retracement level of April to June swing highs and lows. Major support for the index stands at the 100 day moving average at 25,734 and a break below can lead the prices down to 25,000 zone. On the upside major resistance is located at 26,700 the high from May 1st.