The Dow Jones Industrial Average (DJIA) surged 650 points on Friday as investors welcomed the US Personal Consumption Expenditures Price Index (PCE) inflation data, keeping hopes alive for a potential rate cut in September. Despite inflationary pressures, markets remain optimistic about a rate cut in the near future.
Core US PCE inflation held steady at 2.6% YoY in June, defying expectations of a slight decrease to 2.5%. Additionally, near-term PCE inflation rose to 0.2% in June, higher than the forecasted 0.1%. The University of Michigan’s Consumer Sentiment Index fell slightly in July, but consumer inflation expectations increased to 3.0%.
Market sentiment remains positive, with rate markets still pricing in a hold from the Federal Reserve in July and a high probability of a rate cut in September. The Dow Jones index showed strong performance on Friday, with 3M Co. leading the gains after reporting positive revenue figures.
Analysis and Breakdown:
The recent surge in the Dow Jones reflects investors’ optimism amidst inflationary concerns and the possibility of a rate cut by the Federal Reserve. The steady core PCE inflation and positive consumer sentiment have contributed to the market’s positive outlook.
Investors should pay attention to upcoming economic indicators, such as the NFP report, to gauge the market’s future direction. The Dow Jones technical outlook suggests a potential recovery in the coming week, with strong support levels in place.
Overall, the current market trend indicates a cautious optimism with a focus on potential rate cuts and economic data. Investors should stay informed and monitor market developments to make informed decisions about their finances.