- Dow Jones breached into a new all-time high of 40,346.22 on Monday.
- Fedspeak continues to dominate market attention as traders await cuts.
- Rate markets see 98% chance of September rate cut according to CME’s FedWatch.
The Dow Jones Industrial Average (DJIA) rallied into a new all-time peak on Monday, clipping into 40,346.22 before settling back into the day’s opening range near 40,200.00 as markets continue to weigh the odds of a future rate cut from the Federal Reserve (Fed). Fed Chairman Jerome Powell gave a nod of the head on Monday at recent progress on inflation data, helping to spark further hope for a September rate cut and prompting broad-market considerations of an even earlier cut in July.
Fed's Powell: Decisions to be made on a meeting-by-meeting basis
According to the CME’s FedWatch Tool, rate markets are pricing in 98% odds of at least a quarter-point rate trim to the fed funds rate when the Federal Open Market Committee (FOMC) meets on September 18. Interest rate traders broadly see the Fed holding steady when the FOMC meets later this month on July 31. Still, a few particularly rate-cut-hungry market participants are pricing in around 7% odds of an early quarter-point rate trim.
After a steep deceleration in Consumer Price Index (CPI) inflation last week which sparked a fresh rally in rate cut hopes, markets are shrugging off a concerning uptick in Producer Price Index (PPI) wholesale inflation. The next bout of US economic data to watch will be Tuesday’s US Retail Sales, which markets expect to flatten to 0.0% MoM in June compared to the previous month’s 0.1%.
Dow Jones news
The Dow Jones is one of the better-performing major equity indexes on Monday, climbing over 200 points bottom-to-top in Monday’s early surge before settling back into the day’s opening range near 40,200.00. Roughly half of the DJIA’s constituent securities are in the green for the day, with Caterpillar Inc. (CAT) climbing nearly 3% to $345.41 per share and is up a stellar 54% from its 52-week low of $223.76 set in November of last year.
Nike Inc. (NKE) is leading the losers to the bottom of the Dow Jones index, slumping -2.2% to $71.80 per share on Monday. Nike Inc. continues to bled investor interest after the company revised forward guidance sharply lower at the shoe manufacturer’s latest earnings reporting. Nike shares have tumbled -41% from last December’s peak of $123.39 per share, and has fallen below $72.00 per share for the first time since 2018.
Dow Jones technical outlook
The Dow Jones is holding close to the 40,200.00 handle on Monday after setting a fresh record high, and bidders are trying to keep price action propped up above the 40,000.00 major handle. Daily candlesticks continue to hold on the high side of the 200-day Exponential Moving Average (EMA) rising towards 38,000.00.
The Dow Jones has held on the bullish side of the long-term moving average since breaking north of the 200-day EMA back in early November, and the major equity index is up nearly 20% from last October’s bottom near 32,313.50.
Dow Jones five minute chart
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD depreciates due to market caution ahead of US NFP
The Australian Dollar remains subdued against the US Dollar for the second consecutive day on Friday. The AUD/USD pair faces modest headwinds as the USD steadies ahead of the upcoming Nonfarm Payrolls report in the North American session.
USD/JPY: Japanese Yen stands firm near a multi-month high against a broadly weaker USD
The Japanese Yen continues to be underpinned by increasing bets for more BoJ rate hikes. Trade tariff jitters and the risk-off mood further seem to underpin demand for the safe-haven JPY. Expectations for further policy easing by the Fed weigh on the USD and the USD/JPY pair.
Gold price remains depressed ahead of US NFP; trade jitters to limit losses
Gold price trades with negative bias for the second straight day, though a combination of factors continues to act as a tailwind ahead of the crucial US NFP report later this Friday. Rising trade tensions continue to weigh on investors' sentiment.
Crypto AI Tokens: Why FET, NEAR and RNDR could outperform BTC after White House Summit
The White House Crypto Summit is scheduled to hold on Friday. Rather than double-down on BTC, sector-wide price trends show that investors are leaning towards Crypto AI altcoins.
Make Europe great again? Germany’s fiscal shift is redefining the European investment playbook
For years, Europe has been synonymous with slow growth, fiscal austerity, and an overreliance on monetary policy to keep its economic engine running. But a major shift is now underway. Germany, long the poster child of fiscal discipline, is cracking open the purse strings, and the ripple effects could be huge.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.