- The Dow Jones lost more than 400 points on Wednesday at its lowest level.
- The president of the Fed, Powell, made his second appearance in two days.
- The rates markets have postponed the bets of the next Fed fees cut until December.
The Dow Jones industrial average (DJIA) collapsed on Wednesday, falling more than 400 points at its lowest level and going down to 44,090. The feeling of investors was affected after inflation in the United States Consumption Price Index (US) showed that the US has failed to reduce the underlying inflation metrics in eight months. Almost four years have passed since the US underlyzed IPC of the US was below 3.0%.
Live testimony of Jerome Powell: We have not reached the desired inflation
The president of the Federal Reserve (FED), Jerome Powell, made his second appearance in so many days while the FED chief testified to the US government agencies, presenting the Fed monetary policy report to the Fed Committee to the Service Committee Financials of the House of Representatives. Given the last data of the CPI, Powell said that the Fed has not yet achieved its inflation objectives, but acknowledged that the Fed has made significant progress. The ongoing tariff disputes between the US and the rest of the world have complicated things, making it difficult to foresee how monetary policy will be in an uncertain future of US commercial policy.
The general CPI inflation rose to 0.5% monthly, above the forecast of a 0.3% drop from 0.4%. The annualized general CPI also rose to 3.0%, exceeding the expectation of staying at 2.9%. As for the inflation of the underlying CPI, the annual figure stood at 3.3%, while the markets expected a 3.1%decrease from 3.2%, with the monthly figure also rising abruptly to 0.4%, exceeding the provision of 0.3 % and the last 0.2%. The rates markets now expect the Fed to make its next rate cut very late in the year, with bets concentrated in December.
Dow Jones News
Almost the entire Dow Jones’ shares lost ground on Wednesday, although Boeing (BA) and Walmart (WMT) managed to stay on the positive side. Both companies earned around 1.2%, with Boeing up 104 $ per share and Walmart testing over $ 182.
At the lower end, Caterpillar (CAT) and Home Depot (HD) lost about 2% since inflation metrics affect suppliers of machinery and construction materials. Caterpillar fell below $ 355 per share, with Home Depot lowering below $ 410.
Dow Jones price forecast
In spite of the intimate losses, the Dow Jones continues to advance through the graph, keeping in family technical territory. The Dow has not reached a new maximum since the end of November last year, but the downward impulse is still limited. The price action is maintained above the 50 -day exponential mobile average (EMA) about 43,800, and the general trend still leans in favor of the bulls.
Dow Jones daily graphics
Dow Jones Faqs
The Dow Jones Industrial Avenge, one of the oldest stock market indexes in the world, consists of the 30 most negotiated values in the United States. The index is weighted by the price instead of capitalization. It is calculated by adding the prices of the values that compose it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader rates such as S&P 500.
There are many factors that promote the Dow Jones Industrial Average (DJIA) index. The main one is the added performance of the companies that compose it, revealed in the quarterly reports of business benefits. The American and world macroeconomic data also contribute, since they influence investor confidence. The level of interest rates, set by the Federal Reserve (FED), also influences the DJia, since it affects the cost of credit, on which many companies depend largely. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Dow’s theory is a method to identify the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Avenge (DJIA) and the Dow Jones Transportation Average (DJTA) and just follow the trends in which both move in the same direction. The volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. Dow’s theory raises three phases of the trend: accumulation, when intelligent money begins to buy or sell; Public participation, when the general public joins the trend; and distribution, when intelligent money abandons the trend.
There are several ways to operate with the DJ. One of them is to use ETF that allow investors to negotiate the DJ as a single value, instead of having to buy shares of the 30 companies that compose it. An outstanding example is the SPDR Dow Jones Industrial Avenge ETF (day). Future contracts on the DJ allow the specular operators about the future value of the index and the options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Investment funds allow investors to buy a part of a diversified portfolio of DJ values, which provides exposure to global index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
