- The Dow Jones index will once again post record gains on Friday.
- US markets are leaning towards betting on a 50 basis point Fed interest rate cut.
- Mixed sentiment data from the US keeps investor sentiment high.
The Dow Jones Industrial Average rose for a third straight day on Friday, climbing about 350 points and approaching record highs above 41,500 as market sentiment tilts further toward rate cut hopes. Rate traders are pricing in a 45% chance of an initial 50 basis point rate cut by the Federal Reserve (Fed) when the U.S. central bank meets to make a rate decision on Sept. 18, according to CME’s FedWatch tool.
The University of Michigan’s consumer sentiment index rose to 69.0 in September, hitting a four-month high, as surveyed consumers’ outlook for the U.S. economy slowly improves after months of dwindling economic expectations. The rise in the UoM survey helped anchor expectations for interest rate cuts next week, even though the UoM also reported a rise in consumers’ five-year inflation expectations to 3.1% in September from 3.0% previously.
The US export and import price indexes also fell more than expected in August, with the export price index posting a decline of -0.7% compared with the expected -0.1%, reversing the previous month’s 0.5% as inflationary pressures appear to be easing in the terms of trade. The import price index contracted 0.3% month-on-month in August, below the expected -0.2% and down from the previous period’s 0.1%.
Dow Jones News
With stocks leaning heavily toward interest rate cut hopes, the Dow Jones index of stocks is in the green on Friday, with all but three of the DJIA’s component stocks rising to end the trading week. The gains are led by Caterpillar Inc (CAT) and Home Depot Inc (HD), with both up nearly 2% on the day. Caterpillar is testing above $346 per share, while Home Depot is trading above $381 per share for the first time since March.
Elsewhere on the Dow Jones, Boeing Co (BA) fell sharply on Friday, posting a daily return of -3.5% and losing $157 per share as the planemaker went on its first labor strike in more than 15 years.
Dow Jones Price Forecast
The Dow Jones is within striking distance of recent all-time highs, testing the 41,500-point level, down from the current late-August high of 41,574. The Dow is up nearly 4% over the past three days, recovering from a short-term dip below the 50-day exponential moving average (EMA), marking a technical rebound from the 39,989 level.
