Dow Jones Retreat On U.S. – China Trade Tensions

The Dow Jones started lower on Friday as the trade tensions between USA and China escalates after the U.S. administration announced tighter controls targeting telco giant Huawei. Analysts expect now that China might retaliate with extra tariffs on U.S. imports.

Investor’s worries rise amid a spike in COVID-19 cases, as the gradual reopening of the economies continues worldwide.

On the data front, the news from the U.S. economy continues to show the massive damage from the coronavirus outbreak. U.S. Retail Sales came in at -16.4%, a big miss, as the expectations were for -12% in April, the Retail Sales ex Autos came in at -17.2% also below the forecasts of -8.6%. On the contrary, the Michigan Consumer Sentiment Index came in at 73.7, well above the expectations of 68 in May. The NY Empire State Manufacturing Index dropped to -48.5 but beat the forecasts of -63.5 in May.

Dow Jones Industrial average is dragged down by
Apple (AAPL) -2.04% at 303.23 as the semiconductor industry pressured by the Huawei controls. Intel (INTC) -3.09% at 57.25, Boeing -2.92% at 118.90 and American Express -2.47% at 81.74.

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Dow Jones Support and Resistance

Dow Jones is 0.83% lower at 23,440 as the correction from two-month highs continues after yesterdays impressive recovery. The bounce from the 50-day moving average kept the rebound from the March lows alive, but the long term technical picture remains bearish below the 100-day moving average. A break below 22,857 might trigger a new wave of selling pressures towards 21,000. 

On the downside, first support for Dow Jones Industrial Average is at 23,354 daily low. Next strong support for the index will be met at 22,857 the 50-day SMA. A break below might open the way for a test of 21,661 the low from April 6.  

On the flip side, minor resistance for the Dow Jones Industrial stands at 23,653 the daily top. A move above might test 24,356 the high from May 12. The next supply zone for the longer term is at 25,683 the 100-day moving average. 

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