Dow Jones Industrial Average breaks late after US PPI print

• The Dow Jones is still struggling to recover the 41,000 level.
• US PPI inflation kept the door open for a Fed rate cut next week.
• US initial jobless claims also rose, but not enough to dissuade a rate cut.

The Dow Jones Industrial Average (DJIA) stuck close to familiar mid-range territory on Thursday, holding close to the 41,000 handle but struggling to resolutely recover the key technical figure. Business-level US producer price index (PPI) inflation rose slightly faster than expected on a monthly basis, while the annualized figure was flat, easing fears of inflationary pressures threatening to cut rates.

The US PPI rose 0.2% in August and the core PPI rose 0.3% on the month. The headline PPI was forecast to rise to 0.1% from the previous 0.0%, while the core PPI was expected to rise to 0.2% from the -0.2% contraction in July. Despite the near-term pick-up, annualized PPI inflation figures were much more attractive to investors, with annual headline PPI easing to 1.7% from a revised 2.1% in the previous period and ticking below the expected level of 1 .8%. Core annualized PPI also beat the expected print, holding steady at 2.4% versus the expected 2.5% increase.

US initial jobless claims also rose slightly more in the week ended September 6, rising to an expected 230K from a revised 228K the previous week.

With PPI inflation remaining subdued and jobless claims firmly in warm territory, little lies in the way of a first interest rate cut from the Federal Reserve (Fed) on September 18. to kick off the late-start rate cut cycle in 2024. According to CME’s FedWatch tool, rate markets are pricing in a more than 80% chance of a quarter-point Fed cut next week, with 20% still tipping for a cut double initials of 50 bps. Rate traders also overwhelmingly expect the Fed to deliver four cuts in total, with the December rate call expected to land between 425 and 450 bps.

Dow Jones News

The Dow Jones struggled early in Thursday’s market session, but a late-day break has the index up, with only a third of the DJIA testing in the red. Losses were led by Dow Inc ( DOW ), which fell 1.1% to below $50.20 per share. On the upside, Caterpillar Inc ( CAT ) rose nearly 1.5%, climbing back to $340 per share.

Elsewhere in stocks, UnitedHealth Group Inc ( UNH ) took a hit from this week’s Trump vs. Harris political debate. Presidential candidate Donald Trump took a big hit to his election chances following a poor performance in the debate.

Dow Jones Price Forecast

The Dow Jones spent early Thursday in the doldrums, holding the low despite a general rally in US equity markets. The index dipped below 40,750 before making a late break higher, returning to challenge the key 41,000 price level once again.

The major stock index has struggled to advance above the key price level, staying stuck below 41,000 for the past six trading days. However, the bulls look poised for another run to the top, with prices up 2.6% from the bottom to the top over the past two days, while the daily candlesticks are in a bullish move against the exponential moving average ( 50-day EMA) at 40,366.

Dow Jones Daily Chart