- The Dow Jones lost about 100 points on Thursday before returning to the middle.
- US CPI data was higher than expected, US initial jobless claims also increased.
- Markets are firmly planted on bets on a 25 basis point cut in November.
The Dow Jones Industrial Average (DJIA) pared some of the week’s earlier gains after September US Consumer Price Index (CPI) inflation figures fell short of market expectations. U.S. initial jobless claims also accelerated to their highest week-over-week figure in more than a year, indicating that the labor market, while still relatively healthy, still has room for some flexibility in claims. employment figures.
US headline CPI inflation fell to 2.4% year-on-year in September, retreating from 2.5% previously, but remained stubbornly higher than the expected 2.3%. Annualized core CPI inflation also rose to 3.3%, disconcerting the forecast to remain at 3.2%. Still persistent inflation numbers threaten market hopes for a faster and deeper pace of rate cuts by the Federal Reserve (Fed).
Initial US jobless claims rose to 258,000 for the week ending October 4, surpassing the expected 230,000 and rising above the previous week’s figure of 225,000. Although still within the realm of reason, it is still the highest level of new week-over-week jobless claims since May 2023.
Investors are in a tough spot after Thursday’s data: Still-high inflation makes it even harder for the Fed to make further rate cuts, but weakening jobs numbers could tip the Fed toward rate cuts. deeper. However, too sharp a turn toward negative jobs data would be a significant warning sign of an impending recession, which would certainly accelerate the pace of the Fed’s rate cuts, but would directly threaten the stability of equity markets.
According to the CME’s FedWatch tool, rates traders are back betting on a 25 basis point rate cut in November, with a 90% chance that the Fed will deliver a quarter-point cut on November 7. The remaining 10% expect the Fed to make no move next month.
Dow Jones News
The Dow Jones struggled to break even after an initial 100-point drop to start Thursday’s US market session. Despite regaining its footing, a full two-thirds of the main securities board are testing red for the day. Amazon (AMZN) still managed to find the high side, rising more than 1% and testing north of $187 per share.
Dow Jones Price Forecast
The Dow Jones Industrial Average (DJIA) is showing signs of consolidation after recovering from early October lows. It is trading just below recent highs above 42,600, down slightly by 0.10% on the day. The 50-day EMA at 41,300 is providing strong support, and the price action remains well above both the 50-day EMA and the 200-day EMA at 39,173, confirming the further uptrend. wide.
Momentum indicators show mixed signals. The moving average convergence/divergence (MACD) line is slightly above the signal line, suggesting a slowdown in bullish momentum. Traders are closely monitoring whether the MACD line will cross below the signal line, which could be an early sign of a short-term pullback.
As long as the index continues to trade above key support levels, the uptrend remains intact. However, a break below the 50-day EMA could trigger more pronounced selling pressure, potentially pushing the index towards the 200-day EMA. Traders will be watching closely to see if the index can overcome current resistance levels or if it will enter a period of consolidation amid uncertainties in the macroeconomic environment.
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 prominent 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.
