The Dow Jones Industrial Average (DJIA) has continued its upward trend, reaching a new record high on Tuesday as investors anticipate the Federal Reserve’s imminent rate cut. The market is abuzz with speculation on the depth of the expected rate cut, marking the first such adjustment in over four years.
The US Retail Sales figures for August provided some reassurance to investors, as they rose by 0.1% compared to the anticipated -0.2% contraction. July’s Retail Sales figure was also revised upwards to 1.1%, but core Retail Sales, which exclude automotive purchases, only rose by 0.1% as opposed to the 0.2% forecast.
All eyes are now on the Fed’s upcoming rate decision on Wednesday, with market participants eagerly awaiting the outcome. There has been a persistent clamoring for a rate cut since the start of the year, and according to the CME’s FedWatch Tool, there is still uncertainty about the magnitude of the rate cut. Rate traders are currently pricing in a 60% chance of a 50 bps double cut, while the remaining 40% anticipate a more modest 25 bps reduction.
Despite an initial surge to a new intraday high on Tuesday, the Dow Jones has had a mixed performance throughout the day. Walmart Inc. saw a 2% decline after reaching a record high on Monday, while Intel Corp rallied 3.3% following the announcement of plans to spin off its foundry business. The overall performance of the Dow Jones remains balanced, with half of the listed securities in the red.
As the Dow Jones navigates through a mixed trading session, investors are closely monitoring the index’s movement in anticipation of the Fed’s rate decision. A potential pullback to the 50-day Exponential Moving Average at 40,493 cannot be ruled out, as technical resistance levels remain unclear. Despite early signs of a pullback, intraday traders are exercising caution in their strategies.
In conclusion, the Dow Jones has displayed resilience in the face of ongoing market volatility, reaching new highs while facing uncertainty regarding the Fed’s rate decision. Investors are closely monitoring economic indicators, such as the upcoming Fed Interest Rate Decision, which will have a significant impact on market sentiment. As the market awaits further developments, it remains to be seen how the Dow Jones will navigate through the current landscape of economic uncertainty and shifting investor expectations.
