- Dow Jones sets fresh record despite low volumes.
- Stock market moves remain muted as investors recover from a wild rate hike by the Federal Reserve.
- At the end of the week, US inflation data will be significant.
The Dow Jones Industrial Average (DJIA) fell on Monday, hitting a fresh record high of 41,419.65, but investors are still reeling from Friday’s rally after the Federal Reserve (Fed) all but confirmed that a fresh cycle of interest rate cuts will begin in September.
US tough goods orders helped support demand for physical manufacturing inventories on Monday, despite a broad-based decline in the traditionally favored technology sector. US tough goods orders rose a surprising 9.9% mom in July, well above the 4.0% forecast and completely reversing the previous month’s revised -6.9% contraction.
Despite the enhance in tough goods orders, some concerns remain; excluding transportation spending, tough goods orders actually contracted by -0.2% MoM, worse than the forecasted 0.0% and the previous month’s moderate 0.1%, which was revised down from 0.5%.
Much of the trading week will be a peaceful one on the economic calendar. Second-quarter U.S. gross domestic product (GDP) data is due Thursday, but is generally expected to hold steady at an annualized rate of 2.8%. Friday could be a boost for markets that are increasingly focused on the timing and pace of the Fed’s rate cuts, as July’s core measure of U.S. consumer spending inflation (PCE) is expected to hold steady at 0.2% m/m. Year-over-year PCE inflation is expected to rise from 2.6% to 2.7%, but investors are confident that inflation has made enough progress toward the Fed’s 2% target that it would be considered “close enough” to still keep the door open for the first rate cut on Sept. 18.
Dow Jones News
Caterpillar (CAT) is rising Monday in edged contrast to the broader market. The NASDAQ and S&P 500 were sold off Monday morning, while Caterpillar and a number of other Dow Jones stocks gained. In fact, the Dow hit another all-time high of 41,420 on Monday, following a decent performance by the Dow last week.
Read more: Caterpillar helps Dow Jones break through the wave as an eventful week begins
Dow Jones Price Forecast
Intraday price action is causing some choppy trading on a generally peaceful Monday. Bids managed to reach a fresh all-time high above 41,400.00 to start the fresh trading week, but the day is still tilted to the downside as bulls try to run on empty.
The Dow Jones has posted an impressive 7.9% gain since the first week of August, climbing from a low of 38,382.90 to set a fresh all-time high of 41,419.65. Despite the impressive run that has completely tilted to the upside, momentum will quickly fade from the index as bidders exhaust their runway. The Dow is poised for relief in the form of a pullback toward its 50-day exponential moving average (EMA) at 39,946.29.
