Dow Jones Hits New Record High as US Inflation Holds Steady
The Dow Jones Industrial Average (DJIA) reached a new all-time high on Friday, following a week of record-setting bidding action. However, investors remained cautious after US inflation data showed no significant changes, keeping rate cut expectations stable.
US Personal Consumption Expenditure Price Index (PCE) figures for July were in line with expectations, with MoM core PCE inflation staying steady at 0.2% and YoY core PCE inflation at 2.5%. Rate markets are currently pricing in a 30% chance of a double rate cut by the Federal Reserve in September, with the remaining 70% expecting a single quarter-point cut. Overall, traders are anticipating a total of 100 basis points in cuts by 2024.
Looking ahead, next week will see the US markets closed for Labor Day, with key economic data such as the Nonfarm Payrolls (NFP) report and Purchasing Managers Index (PMI) figures on the horizon. The NFP print will be crucial in determining the Fed’s next move in response to market expectations.
Dow Jones Performance and Forecast
On Friday, the Dow Jones saw a mix of gains and losses among its constituents, with the index hitting an intraday high of 41,497 before retreating. While some stocks like Salesforce and American Express faced declines, Intel surged over 9% on rumors of strategic shifts.
Technically, the Dow Jones remains bullish, trading well above its 200-day Exponential Moving Average (EMA) and showing resilience to downside corrections. The index has climbed over 8% from its recent low and is testing new highs, but there are signs of waning momentum that may lead to a period of consolidation or a potential pullback.
Federal Reserve FAQs
Monetary policy in the US is driven by the Federal Reserve (Fed), which aims to achieve price stability and full employment through interest rate adjustments. The Fed’s policy decisions impact the strength of the US Dollar and borrowing costs in the economy. The Fed holds regular meetings to assess economic conditions and make monetary policy decisions, with tools like Quantitative Easing (QE) and Quantitative Tightening (QT) used in extreme situations.
Overall, the Dow Jones’ performance, US inflation data, and the Fed’s upcoming decisions have significant implications for investors and market participants. Understanding these factors can help individuals make informed decisions about their finances and investments in the current economic landscape.