Dow Jones Industrial Average rises on renewed rate cut hopes
-
Dow
Jones
climbed
to
39,500.00
as
markets
read
between
the
lines. -
Fed
Chair
Powell
wraps
up
two-day
Congressional
testimony. -
Markets
look
ahead
to
key
US
inflation
data
later
in
the
week.
The
Dow
Jones
Industrial
Average
(DJIA)
climbed
on
Wednesday,
testing
above
39,500.00
as
equity
markets
stepped
back
into
a
risk-on
stance.
Rate
cut
hopes
continue
to
underpin
broader
market
flows,
and
investors
have
recovered
their
footing
and
brushed
off
an
overall
cautious
tone
from
Federal
Reserve
(Fed)
Chairman
Jerome
Powell.
Fed
Chair
Powell
wrapped
up
the
second
of
a
two-day
appearance
before
US
Congressional
committees
on
Wednesday,
with
the
head
of
the
US
central
bank
sticking
close
to
a
familiar
script
across
both
days.
While
giving
a
nod
of
the
head
to
overall
progress
on
inflation,
and
admitting
that
the
Fed
isn’t
going
to
wait
until
inflation
hits
the
2%
annual
target,
Fed
Chair
Powell
remains
firmly
planted
in
a
cautious
stance.
While
the
Fed
won’t
be
waiting
for
inflation
to
hit
the
overall
target,
Fed
officials
still
want
further
evidence
that
inflation
will
eventually
hit
2%
before
delivering
rate
cuts.
According
to
the
CME’s
FedWatch
Tool,
rate
markets
still
have
hopes
firmly
pinned
on
a
September
rate
cut,
with
interest
rate
traders
pricing
in
75%
odds
of
at
least
a
quarter-point
trim
to
the
fed
funds
rate
on
September
18.
With
the
Fed
entrenched
in
a
wait
for
further
signs
of
easing
inflation,
markets
will
be
firmly
focused
on
US
inflation
figures
due
this
week.
US
Consumer
Price
Index
(CPI)
inflation
is
slated
for
Thursday,
with
US
Producer
Price
Index
(PPI)
wholesale
inflation
due
on
Friday.
Rate-cut-hungry
investors
may
be
set
up
for
disappointment
with
June’s
annualized
core
CPI
expected
to
hold
steady
at
3.4%,
and
Friday’s
YoY
core
PPI
expected
to
actually
tick
higher
to
2.5%
from
the
previous
2.3%.
Dow
Jones
news
The
Dow
Jones
firmly
shook
off
cautious
tones
on
Wednesday,
rallying
to
a
daily
high
of
39,526.17
and
climbing
around
200
points.
Over
two-thirds
of
the
index
is
in
the
green
for
the
day,
with
Honeywell
International
Inc.
(HON)
leading
the
charge,
climbing
1.4%
on
Wednesday
but
closely
followed
by
megacap
companies
including
Amgen
Inc.
(AMGN),
Home
Depot
Inc.
(HD),
Apple
Inc.
(AAPL),
and
McDonald’s
Corp.
(MCD).
On
the
low
side,
Visa
Inc.
(V)
fell
to
the
bottom
of
the
board,
backsliding
-1.8%
to
$260.61
per
share.
Dow
Jones
technical
outlook
The
Dow
Jones
has
given
a
choppy
two-day
performance,
climbing
a
full
percentage
point
bottom-to-top
from
Tuesday’s
lows
near
39,130.00.
Bullish
momentum
is
poised
for
a
breakout
of
recent
consolidation
as
price
action
gets
squeezed
between
the
50-day
Exponential
Moving
Average
(EMA)
near
39,000.00
and
a
supply
zone
priced
in
near
the
40,000.00
major
price
handle.
Dow
Jones
five
minute
chart
Dow
Jones
daily
chart
Dow
Jones
FAQs
The
Dow
Jones
Industrial
Average,
one
of
the
oldest
stock
market
indices
in
the
world,
is
compiled
of
the
30
most
traded
stocks
in
the
US.
The
index
is
price-weighted
rather
than
weighted
by
capitalization.
It
is
calculated
by
summing
the
prices
of
the
constituent
stocks
and
dividing
them
by
a
factor,
currently
0.152.
The
index
was
founded
by
Charles
Dow,
who
also
founded
the
Wall
Street
Journal.
In
later
years
it
has
been
criticized
for
not
being
broadly
representative
enough
because
it
only
tracks
30
conglomerates,
unlike
broader
indices
such
as
the
S&P
500.
Many
different
factors
drive
the
Dow
Jones
Industrial
Average
(DJIA).
The
aggregate
performance
of
the
component
companies
revealed
in
quarterly
company
earnings
reports
is
the
main
one.
US
and
global
macroeconomic
data
also
contributes
as
it
impacts
on
investor
sentiment.
The
level
of
interest
rates,
set
by
the
Federal
Reserve
(Fed),
also
influences
the
DJIA
as
it
affects
the
cost
of
credit,
on
which
many
corporations
are
heavily
reliant.
Therefore,
inflation
can
be
a
major
driver
as
well
as
other
metrics
which
impact
the
Fed
decisions.
Dow
Theory
is
a
method
for
identifying
the
primary
trend
of
the
stock
market
developed
by
Charles
Dow.
A
key
step
is
to
compare
the
direction
of
the
Dow
Jones
Industrial
Average
(DJIA)
and
the
Dow
Jones
Transportation
Average
(DJTA)
and
only
follow
trends
where
both
are
moving
in
the
same
direction.
Volume
is
a
confirmatory
criteria.
The
theory
uses
elements
of
peak
and
trough
analysis.
Dow’s
theory
posits
three
trend
phases:
accumulation,
when
smart
money
starts
buying
or
selling;
public
participation,
when
the
wider
public
joins
in;
and
distribution,
when
the
smart
money
exits.
There
are
a
number
of
ways
to
trade
the
DJIA.
One
is
to
use
ETFs
which
allow
investors
to
trade
the
DJIA
as
a
single
security,
rather
than
having
to
buy
shares
in
all
30
constituent
companies.
A
leading
example
is
the
SPDR
Dow
Jones
Industrial
Average
ETF
(DIA).
DJIA
futures
contracts
enable
traders
to
speculate
on
the
future
value
of
the
index
and
Options
provide
the
right,
but
not
the
obligation,
to
buy
or
sell
the
index
at
a
predetermined
price
in
the
future.
Mutual
funds
enable
investors
to
buy
a
share
of
a
diversified
portfolio
of
DJIA
stocks
thus
providing
exposure
to
the
overall
index.
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