Dow Jones Industrial Average sets new record high before tumbling 500 points on Thursday

Dow Jones rose into a fifth consecutive all-time high before receding on Thursday.
Equities are paring back after a heady rally on rate cut hopes.
September rate cut is fully priced in, Fed hold at the end of July expected.

Joshua Gibson FXStreet

The Dow Jones Industrial Average (DJIA) rallied into yet another record high on Thursday before turning lower and following the broader market into a soft pullback that dragged intraday prices back into the midweek range. The Dow Jones is trading firmly above the 40,000.00 major price handle after getting buoyed into all-time highs by investor expectations of a September rate cut getting pinned to the ceiling.

According to the CME’s FedWatch Tool, rate markets are pricing in over 98% odds of at least a quarter-point rate trim from the Federal Reserve (Fed) in September. Some particularly adventurous rate traders are pricing in a 5% chance of a first cut in July, but odds remain low at 5%.

Thursday’s Initial Jobless Claims print helped to keep rate cut hopes bolstered after the number of new jobless benefits seekers rose to 243K for the week ended July 12, well above the previous week’s revised 223K and vaulting over the forecast 230K. While jobless claims aren’t a market-mover, it helps add weight to expectations of a continued loosening in the US job market, a key component alongside inflation figures to help bully the Fed into a rate cutting cycle.

Dow Jones news

Despite easing back into the low end on Thursday, the Dow Jones is roughly on-balance, with about half of the index’s constituent equities in the green for the day. Intel Corp. (INTC) rose over 3% to $35.52 per share despite an overall decline in the chipmaking sector. Banking dominated the low end on Thursday, with JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) both declining. JPM shed -2.85% to $210.69 per share while GS eased lower -2.43% to $489.98 per share.

Dow Jones technical outlook

After hitting a fifth consecutive all-time high of 41,37138 on Thursday, the Dow Jones index fell back below 40,900.00 as bulls take a much-needed breather. The Dow Jones closed in the green for six straight trading days, rallying nearly 5.5% in the process.

The Dow Jones’ latest bullish push has sent prices well into record highs, and even Thursday’s moderate pullback of -500 points still leaves prices buried deep in bull country, trading nearly 4% above the 50-day Exponential Moving Average (EMA) at 39,345.00.

Dow Jones five minute chart

Dow Jones daily chart

Economic Indicator

Continuing Jobless Claims

The Continuing Jobless Claims released by the US Department of Labor measure the number of individuals who are unemployed and are currently receiving unemployment benefits. It is representative of the strength of the labor market. A rise in this indicator has negative implications for consumer spending which discourages economic growth. Generally speaking, a high reading is seen as bearish for the US Dollar (USD), while a low reading is seen as bullish.

GBP/USD edges lower due to safe-haven demand

GBP/USD inches lower after opening at a bullish gap, trading around 1.3200 during the Asian hours on Monday. The pair loses ground as the Pound Sterling declines against the US Dollar amid emerging safe-haven demand, which could be attributed to the United States-Iran talks uncertainty.

EUR/USD remains stronger despite uncertainty surrounding US-Iran talks

EUR/USD pair maintains its upward momentum for a third consecutive session, trading near 1.1390 during Monday's Asian hours. Despite this positive streak, the Euro’s gains could face headwinds if geopolitical uncertainty sparks a flight to safety, boosting the US Dollar.

Gold falls to near $4,050 amid US- Iran talks uncertainty

Gold price attracts some sellers to around $4,050 during the Asian trading hours on Monday. The precious metal declines amid uncertainty surrounding US-Iran talks and hawkish Federal Reserve expectations. The US Nonfarm Payrolls data will take center stage later on Thursday.

Week ahead: NFP report to challenge Dollar strength and the hawkish Fed

The end of the Middle East conflict and the steps made so far towards securing a comprehensive deal over the next five weeks – with oil prices dropping aggressively but maintaining a small risk premium – has allowed investors to focus elsewhere. Contrary to expectations, the greenback has been the main protagonist lately.

Middle East War updates: US, Iran appear to be returning to talks to end the war

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.