- The Dow Jones index rose 450 points on Thursday as sentiment improved.
- US GDP data boosted investor confidence after the release of results that beat expectations.
- On Friday we will continue to monitor US PCE inflation data.
The Dow Jones Industrial Average (DJIA) rose 1.1%, or 450 points, on Thursday, supported by forecasted improvement in U.S. gross domestic product (GDP) growth in the second quarter. U.S. PCE inflation data due on Friday remains the key data of the week. Markets remain confident that the Federal Reserve (Fed) is on track to begin a rate-cutting cycle in September.
U.S. second-quarter GDP beat forecasts Thursday morning, supporting market sentiment and sending investors back into a bidding war. Second-quarter annualized GDP came in at 3.0%, compared with expectations for a hold of 2.8%, while initial jobless claims also fell to 231,000 in the week ending Aug. 23. Investors had been expecting a print of 232,000, compared with the previous week’s revised reading of 233,000.
US core PCE inflation is expected to hold steady in the MoM range on Friday, rising slightly year-over-year. Core PCE inflation in July is forecast to hold steady at 0.2% MoM, while the year-over-year figure for July is forecast to rise to 2.7% from 2.6% previously. A below-expectations print would see markets return to hopes for an extended initial Fed rate cut on September 18, while an above-expectations print could send investors fleeing the potential for a resurgence in inflation, crippling the Fed just ahead of a widely anticipated cut.
Dow Jones News
Risky Thursday sees most of the Dow Jones Index trading in the green for the second half of the trading week. Only one of the Dow Jones stocks is in the red on the day, with Home Depot (HD) down about one-fifth of one percent and trading below $370.00 per share.
Nvidia’s (NVDA) after-hours earnings call failed to excite tech investors this week, with Nvidia reporting lower-than-expected earnings growth and overall profit growth falling brief of investor expectations.
Dow Jones Price Forecast
The Dow returned to the 41,300 level on Thursday after briefly dipping below 41,000 in midweek. The index recovered on Wednesday but tilted back to the upside as daily candles continued to test the chart paper near record highs set earlier in the trading week.
Traders hoping to capitalize on a bearish pullback risk underestimating bullish market pressure, but risk takers will look for signs of a technical breakdown to jump on the brief train. Immediate technical targets hover near the 50-day exponential moving average (EMA) just above the 40,000 major price handle.
