- The Dow Jones hit an all-time high on Friday.
- US PPI data showed September producer-level inflation remained broadly unchanged.
- Strong bank performance helped further strengthen stocks.
The Dow Jones Industrial Average (DJIA) rose more than 400 points from bottom to top on Friday to hit a modern record high of 42,837 after US inflation data, the Producer Price Index (PPI), cooled in September. Weaker inflation at the manufacturer level and confident bank profits lifted stock prices on all stock exchanges, and the Dow entered its fifth consecutive winning week.
US producer prices flattened in September, holding steady at 0.0% m/m compared to expected 0.1% and 0.2% in August. Despite the cooling in monthly results, September’s year-over-year PPI result fell less than expected, reaching 1.8% compared with the expected 1.6%, but still lower than August’s revised result of 1.9%.
Despite a cooling of headline PPI data that favors interest rate cuts, core PPI inflation remains a threat. Core PPI inflation excluding food and energy prices actually rose to 2.8% y/y in September, exceeding the expected 2.7%. The annualized PPI for August was also revised to 2.6% from the original print of 2.4%.
The University of Michigan (UoM) consumer sentiment index fell to 68.9 in October from its previous print of 70.1. The markets were hoping for a slight enhance to 70.8. Meanwhile, JM’s 5-year consumer inflation expectations delivered good news to markets, falling to 3.0% from the previous print of 3.1%.
Dow Jones News
The Dow Jones swung sharply toward the upside on Friday, and fewer than ten stocks on the stock board were in the red during the final session of the week. IBM (IBM) fell another percentage point, falling below $231 per share, followed closely by Salesforce (CRM), which lost about eight-tenths of one percent, falling below $288 per share.
In other Dow Jones news, bank earnings season helps boost the main index on a record Friday, with JPMorgan gaining after reporting better-than-expected financial results that easily topped forecasts.
Dow Jones Price Forecast
The Dow added about 300 points today, gaining about two-thirds of a percent to reach near 42,700. This latest move comes after the index made several attempts to break above key resistance near 42,700 over the past few sessions. The strength of today’s rally suggests bulls are gaining momentum, supported by broader optimism in the stock markets. Traders will be watching to see if the index can maintain its momentum and capitalize on today’s gains, potentially heading towards the 43,000 level, the psychological resistance level.
Technical indicators point to further support for the bullish outlook. The 50-day exponential moving average (EMA) remains well below the current price action, suggesting that near-term momentum favors the bulls. The 200-day EMA continues to rise towards 39,400, reinforcing the long-term uptrend that has been in place since early 2023. With prices well above these key averages, it appears that buyers have a firm grip on the market, although a short-term reversal to the 50-day EMA is always possible as the market digests the recent gains.
