- The Dow Jones is rebounding from lows near 38,000.00 after a mighty decline.
- Market sentiment is improving as hopes for interest rate cuts rise again.
- US PCE price index inflation is falling faster than expected.
The Dow Jones Industrial Average (DJIA) rallied nearly 580 points on Friday as investor sentiment improved after U.S. Personal Consumer Expenditures (PCE) price index inflation fell faster than expected. Exchange rate markets are once again pricing in better than even odds of a September interest rate cut by the Federal Reserve (Fed). The Dow Jones index is also supported by a mighty rebound in Salesforces Inc. (CRM) after the management company failed to meet revenue expectations for the first time since 2006, sending the company’s shares plummeting by more than 20%.
US PCE price index inflation fell to 0.2% m/m in April, remaining below the forecast at a constant level of 0.3%. U.S. personal spending also fell more than expected in April, falling to just 0.2% m/m compared to the 0.3% forecast and further down from the previous month’s revised level of 0.7%.
As inflation pressures show further signs of easing, investors are once again turning to hopes for a September rate cut from the Fed’s Federal Open Market Committee (FOMC). According to CME’s FedWatch tool, interest rate markets are pricing in only a 48% chance of no rate change in September.
Dow Jones News
The Dow Jones Index is generally higher on Friday, with all but two of the securities included in the index in green on that day. Amazon Inc. (AMZN) fell -1.6% to $176.44 per share despite announcing progress on Amazon’s planned drone delivery services. Investors remain skeptical whether the delivery company will be able to see returns from its automated delivery plans.
On Friday, Salesforce Inc. (CRM) rose 7.54% to close at $234.44 per share as the stock slowly rebounded after a keen sell-off earlier in the week. CRM fell more than 20% this week after the management software company beat earnings expectations by $40 million. CRM reported first-quarter revenue of $9.133 billion, up 11% year-over-year, while the median analyst estimates expected revenue of $9.145 billion. CRM also issued lowered future growth and profit guidance as the long-established company struggles to find novel customer markets to enter.
Dow Jones Technical Outlook
The Dow Jones Index is rebounding from keen short-term declines, hitting 38,380.00 this week after hitting a novel May low near 38,000.00 this week. The major stock index has fallen on all but three of the last ten trading days, and the DJIA is still -4.2% from record highs set on May 20 just above 40,000.00.
The Dow Jones Index continues to trade north of its 200-day exponential moving average (EMA) at 37,220.72, but keen near-term declines leave the index well below all-time highs and facing near-term pressure.
