The Dow Jones Industrial Average (DJIA) surged over 450 points on Friday, reaching a fresh all-time high above 40,200.00. Despite an acceleration in US Producer Price Index (PPI) wholesale inflation, markets remained optimistic about potential rate cuts from the Federal Reserve (Fed) in September. This led to a 95% chance of a rate cut on September 18, with market forecasts indicating three rate cuts by 2024.
While US core PPI wholesale inflation exceeded expectations at 3.0% YoY in June, market focus shifted to a decline in Consumer Price Inflation (CPI) earlier in the week to support rate cut expectations. Additionally, the University of Michigan’s Consumer Sentiment Index fell to a seven-month low of 66.0, reflecting growing consumer pessimism about the economic outlook.
In terms of stock performance, the Dow Jones saw significant gains with over two-thirds of its constituent securities ending the day in the green. Notable movements included Intel Corp. rising nearly 3% and JPMorgan Chase & Co. declining -1.21%. Overall, the Dow Jones closed the week nearly reaching the 40,000.00 price level.
Technical analysis shows that the Dow Jones index is up 6.82% in 2024 and has climbed 24.59% from the previous swing low. Daily candles are trading above key moving averages, indicating a positive trend.
In conclusion, the Dow Jones’ record-breaking performance, coupled with market optimism for rate cuts and mixed economic data, has driven investor sentiment and stock market activity. Market participants are closely monitoring developments to gauge future market movements and opportunities for potential gains.