- The Dow Jones is testing above the level of 43,000 for the first time since February.
- The US IPC inflation was lower than expected, which increases the hopes of investors for feat cuts from the Fed.
- Commercial tensions with China are decreasing after delegates from both parties reached a consensus.
The Dow Jones Industrial Average (DJIA) rose on Wednesday, promoted by the inflation data of the May Consumer Price Index (CPI), which were lower than expected, as well as by a tentative commercial policy framework after two days of commercial conversations in London. The framework still needs the final approval of President Donald Trump and the Chinese President Xi Jinping; However, the markets are optimistic that progress will see both parties continue to move away from the recent commercial war rhetoric.
IPC inflation in May in general was below expectations, helping to reinforce the feeling of investors in the market in general. Even so, there are some obvious difficulties of price volatility faced by policies responsible for the rest of the year. The general IPC inflation still rose in annualized terms, reaching 2.4% year -on -year, and the inflation of the underlying CPI, which excludes volatile food and energy prices, remained stable in 2.8% interannual. The figures are still well above the annual inflation target of 2% of the Federal Reserve (Fed), but investors still bet on an increase in the probabilities of a Fed rates cut in September. According to the CME Fedwatch tool, the probabilities of at least one rate cut of a quarter point at the September meeting of the Fed have increased to almost 70%.
After two days of private commercial conversations held in London, the delegates of the Trump administration and the Chinese government have reached a preliminary commercial policy framework, which is now aimed at the respective offices of Presidents Trump and XI. According to public networks of President Trump, tariffs on Chinese products remain at 55%, while China maintains its 10% import tax over all products manufactured in the US.
Dow Jones price forecast
The Dow Jones industrial average has finally exceeded the important price level of 43,000 after months of tariff stagnation. The upward feeling of investors has driven Dow Jones at maximum 14 weeks, and has put Djia again on the way to try to reach new historical maximums above 45,000.
Although the technical oscillators are firmly in overcompra territory, the Dow Jones continues to ascend, with the main stock market index on all except four of the last 12 consecutive negotiation sessions. The DJ is quoted well above the 200 -day exponential (EMA) average about 41,775, and buyers will seek to set a new technical floor in the old point of maximum swing about 42,600.
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.
