- The Dow Jones traded in the middle on Tuesday.
- Shares tested lower but held at the day’s opening bids.
- Markets gearing up ahead of key US CPI inflation update
The Dow Jones Industrial Average (DJIA) was flat on Tuesday, briefly testing the lower end below 44,200 before bouncing to the day’s opening prices near 44,400. Stocks are stagnant as investors await the latest release of the US Consumer Price Index (CPI), scheduled for Wednesday.
Investors will be watching Wednesday’s CPI inflation release, which serves as one of the last key data releases ahead of the Federal Reserve’s (Fed) final policy meeting in 2024. Signs that progress where inflation has stagnated could dash hopes of a third straight rate cut on December 18.
China’s recently announced policy change represents the Asian giant’s first step toward a looser monetary policy stance since the early 2010s. Investors generally reacted positively to the news that China would inject much-needed cash directly into global markets. However, the bullish momentum from the news has faded as traders now grapple with the reality that China’s commitments to monetary policy tightening remain bleak. To make matters worse, the conditions that would require a change from a more than decade-old policy stance are less than ideal investment conditions.
Economic indicator
Consumer Price Index (YoY)
The CPI is published on US Labor Department and measures price movements through the comparison between retail prices of a representative basket of goods and services. The purchasing power of the dollar is diminished due to inflation. The CPI is a key indicator for measuring inflation and purchasing trends. A reading above expectations is bullish for the dollar, while a reading below is bearish.
Next post:
Wed Dec 11, 2024 1:30 p.m.
Frequency:
Monthly
Dear:
2.7%
Previous:
2.6%
Fountain:
US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Dow Jones News
A tepid market session on Tuesday sees the action in the Dow Jones split roughly evenly between the day’s winners and losers. Merck & Co (MRK) fell 2.5% to settle below $102 per share, while Boeing (BA) rebounded an additional 4.5% and rose above $164 per share, as investors continue rebidding to stricken aircraft manufacturer. Boeing has been besieged by problems lately, including strikes, lawsuits, manufacturing errors and, worst of all, failed earnings calls. But investors are taking heart after the aircraft maker announced it would revive its appeal to investors by cutting ten percent of its global workforce despite a multi-year backlog of customer orders that continues to build up.
Dow Jones Price Forecast
The Dow Jones has quietly closed lower for three consecutive trading days when no one was watching, dragging intraday price action below 44,400 after testing all-time highs above 45,000 last week. Despite the short-term decline, prices remain firmly rooted at the upper end, with bids floating well above the 50-day EMA near 43.437.
Dow Jones Daily Chart
The Dow Jones FAQs
The Dow Jones Industrial Average, one of the world’s oldest stock indices, is made up of the 30 most traded securities in the United States. The index is weighted by price rather than capitalization. It is calculated by adding the prices of the securities that comprise 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 indices such as the S& P 500.
There are many factors that drive the Dow Jones Industrial Average (DJIA). The main one is the aggregate performance of its component companies, revealed in quarterly corporate earnings reports. US and global macroeconomic data also contribute, influencing 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 companies largely depend. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
The Dow Theory is a method for identifying the main 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 they are both moving in the same direction. Volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. The Dow theory proposes three phases of the trend: accumulation, when the smart money begins to buy or sell; public participation, when the general public joins the trend; and distribution, when the smart money abandons the trend.
There are several ways to trade the DJIA. One of them is to use ETFs that allow investors to trade the DJIA as a single security, instead of having to buy shares of the 30 companies that comprise it. A notable example is the SPDR Dow Jones Industrial Average ETF (DIA). Futures contracts on the DJIA allow 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 allow investors to purchase a portion of a diversified portfolio of DJIA securities, providing exposure to the 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.
