- During Monday’s trading, the Dow Jones index reached a up-to-date all-time high.
- Despite the upward trend, stocks remain generally stable.
- Investors are preparing for the Federal Reserve’s interest rate announcement on Wednesday.
The Dow Jones Industrial Average (DJIA) hit another record intraday high to kick off a up-to-date trading week. The top stocks on the New York Stock Exchange (NYSE) rose Monday ahead of Wednesday’s Federal Reserve (Fed) interest rate call, widely seen as the Fed’s first rate cut since March 2020.
The Fed is all but certain to begin a up-to-date round of rate cuts on Wednesday, according to investors, and now it’s a debate about how much, not when. According to CME’s FedWatch tool, rates traders are pricing in a roughly 60% chance that the Fed’s first rate cut in more than four years will be a 50 basis point cut in the federal funds rate, while the remaining 40% expect a more restrained 25 basis points. Rate markets are also pricing in a total of 125-150 basis points of cuts by the end of the year, with interest rate traders seeing a roughly 80% chance that the federal funds rate will reach a total of 400-425 basis points by Dec. 18, compared with the current rate of 525-550.
U.S. retail sales are due for an update on Tuesday, but a key data point that would normally cause some level of volatility is not expected to affect the situation this week unless the print is very much off-track. Month-on-month growth in U.S. retail sales in August is expected to fall to 0.2% from 1.0% in July, while month-on-month core retail sales (excluding auto purchases) are expected to fall to 0.3% from 0.4%.
Dow Jones News
Despite the generally frigid tone on US stock markets on Monday, the Dow tilted towards the upside, rising about 220 points and adding 0.54% with the current average near 41,600. The DJIA hit a up-to-date intraday record high of 41,738 before settling as investors bided their time.
Intel Corp (INTC) rose 7%, gaining more than $21 per share, after it was revealed the chipmaker is set to receive a $3.5 billion subsidy from the U.S. government to produce chipsets for the U.S. military and the Pentagon. Despite Monday’s gain, INTC barely broke its lows in more than a decade and has yet to regain ground after missing an earnings call in August. A technical recovery has yet to materialize after the silicon giant gleefully announced it would lay off more than 15,000 workers to appease shareholders and try to stem the company’s nearly 60% year-to-date decline in stock value.
At the low end, Apple Inc (AAPL) fell -2.7% to $216 per share after reports emerged that demand for the company’s 16th version of its iPhone platform may not be as sturdy as many had expected. Key AI-based features that Apple has been relying on to revive flagging sales are still not publicly available, flattening phone sales, according to analysts. At the same time, extended shipping times are further alienating potential buyers. Sales of the company’s latest annual phone update fell 12% year over year, according to an analysis by TF Securities.
Dow Jones Price Forecast
Despite the generally tepid trading mood in stocks on Monday, the Dow Jones still found plenty of room on the bidders’ side, hitting a up-to-date all-time high and turning the corner on a fourth straight day of gains. The main stock index has recovered nearly 4.4% from bottom to top since last week’s low of just under 40,000.
DJIA recovers above 50-day exponential moving average (EMA) above 40,450, with the action firmly on the bullish side, although long-term bidders will be cautious given the price action cycles at known technical levels. This is not the first time Dow Jones has priced in a top pattern ahead of a major news event, and despite short-term memory issues, buyers still remember July’s ragged -7.2% decline from previous record highs.
