Linh Tran

The recovery momentum of the Dow Jones (US30) is showing signs of slowing down as the market faces mixed economic data and mounting risks from both trade and geopolitical fronts. Following a prolonged rally since mid-April, the upward momentum is gradually weakening as investors adopt a more cautious stance toward the U.S. economic outlook and global policy developments.

Since the beginning of last week, the market has received a series of economic indicators delivering mixed signals. The ADP employment report showed that the private sector added only 37,000 new jobs—the lowest figure in over two years—raising concerns about a weakening labor market.

On the other hand, the Services PMI came in above expectations at 53.7, reflecting continued expansion in the consumer-facing sector. However, the ISM Non-Manufacturing PMI unexpectedly dropped below the 50 threshold, signaling a contraction in service activities.

These conflicting data points have created opposing forces for U.S. equities, with the Dow Jones fluctuating in a state of hesitation. Investors are now turning their attention to upcoming key data releases, particularly the Non-Farm Payrolls (NFP) report and the unemployment rate. If the NFP data comes in weaker than expected and the unemployment rate rises, the likelihood of the Federal Reserve easing policy increases—potentially providing support for the market. Conversely, stronger-than-expected data could reinforce expectations of prolonged high interest rates, exerting downward pressure on the Dow.

Beyond macroeconomic factors, the market is also closely monitoring developments on the global trade front. The Trump administration’s decision to double tariffs on steel and aluminum imports, along with a July deadline for trade partners—including China—to submit proposals to avoid further tariff hikes, has reignited fears of a renewed trade war. If this scenario unfolds, risk-sensitive assets such as the Dow Jones will likely face significant negative impact.

On the geopolitical front, tensions between Russia and Ukraine continue to persist without any meaningful progress toward a peaceful resolution. Fighting remains active in several key regions, while diplomatic efforts remain stalled due to hardline positions on both sides. Meanwhile, the West continues to escalate sanctions on Russia, further straining global supply chains and commodity markets, especially in energy and food sectors.

In this context, geopolitical factors have not provided any meaningful boost to the U.S. stock market. On the contrary, they have intensified uncertainty and systemic risk. As a result, capital is increasingly shifting away from risk assets such as equities—including the Dow Jones—toward safer havens like gold.

Given the prevailing uncertainty across macroeconomic, trade, and geopolitical dimensions, the Dow Jones may continue to trade within a narrow range in the short term, with a sideways trend likely to dominate. Investors are currently in need of clear catalysts—potentially in the form of labor market data, Federal Reserve policy shifts, or U.S.-China trade developments—to establish a more definitive market direction.

Tran is Market Analyst at XS.com