The Dow Jones Industrial Average (DJIA) soared 260 points on Wednesday following a decrease in US Consumer Price Index (CPI) inflation, in line with market expectations. While investors were hoping for even lower inflation figures after a drop in producer-level inflation earlier in the week, consumer-level inflation remained steady.
US CPI inflation for July came in at 2.9% YoY, slightly below the projected 3.0%, with core CPI inflation also declining to 3.2% from the previous 3.0%. Despite the monthly CPI figures showing a 0.2% increase, some investors were expecting a more significant decrease based on recent trends.
Market sentiment regarding a potential rate cut from the Federal Reserve (Fed) in September has slightly decreased, with odds now at 40% compared to 50% earlier in the week. However, the Dow Jones index showed positive movement, with most equities gaining post-CPI, except for a few outliers such as Intel Inc. (INTC).
Dow Jones Price Forecast and Technical Analysis
Following two consecutive days of gains, the Dow Jones index is approaching the 40,000.00 major price level. However, further momentum is needed to surpass this key resistance point after a slight pullback from 40,040.00.
The index is currently above the 50-day Exponential Moving Average (EMA) at 39,593.00 and has seen a 4.3% increase from recent lows near 38,383.00. Buyers are aiming to reclaim all-time highs above 41,200.00, set in July.
Dow Jones FAQs – Understanding the Stock Market Index
For those unfamiliar with the Dow Jones Industrial Average, it is a price-weighted index comprised of the 30 most traded stocks in the US. Factors such as company earnings reports, macroeconomic data, and interest rate levels influence the index’s performance. Traders can engage with the DJIA through ETFs, futures contracts, options, and mutual funds.