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  • Industrials slip as tariffs go into effect.
  • Headlines surrounding U.S. Deputy Attorney General Rod Rosenstein weigh on the sentiment.
  • WTI jumps to 11-week highs above $72 to boost energy sector.

With import tariffs of the United States and China on each other going into effect on Monday, global equity indices took a defensive stance, and Wall Street pushed lower after starting the day in the negative territory. In addition to trade worries, the political drama surrounding the U.S. Deputy Attorney General Rod Rosenstein further weighed on the market sentiment. The CBOE Volatility Index, Wall Street’s fear gauge, gained around 5% to reflect the risk-off mood.

The trade-sensitive S&P 500 Industrials and the S&P 500 Consumer Staples indexes lost 1.5% and 1.32%, respectively, on the day.  “The Rosenstein stuff is just another negative story that is piling on top of other stories out there today, China obviously being the biggest negative, that is the one that really has the potential to price stocks,” Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York, told Reuters.

On the other hand, following the OPEC+ meeting in Algiers, crude oil prices rallied on Monday with the barrel of West Texas Intermediate surged to its highest level since July at $72.70 to help the S&P 500 Energy Index close the day 1.5% higher despite the negative sentiment.

The Dow Jones Industrial Average dropped 181.25 points, or 0.68%, to 26,562.25, the S&P 500 erased 10.14 points, or 0.35%, to 2,919.53 and boosted by the 0.3% gain seen in the S&P 500 Information Technology Index, the Nasdaq Composite gained 7.47 points, or 0.09%, to 7,994.42.

DJIA technical outlook via FXStreet Chief Analyst Valeria Bednarik

The daily chart for the Dow shows that the index barely lost upward strength, as indicators have just begun correcting extreme overbought conditions, while the index holds well above bullish moving averages, with the 20 DMA some 450 points below the current level.

Shorter term, and according to the 4 hours chart, however, the index could continue shedding ground, as the index broke below its 20 SMA, now losing upward strength, the Momentum indicator heads south below its 100 level, while the RSI indicator is trying to stabilize at around 54.

Support levels: 26,546 – 25,498 – 25,446.

Resistance levels: 26,626 – 26,677 – 26,732.