The Dow Jones Industrial Average hits another record high on Friday

VaselineSeptember 27, 2024

0 3 minutes read

The Dow Jones Industrial Average hits another record high on Friday

The Dow Jones climbed to another new high after the PCE inflation print.
Headline PCE inflation edged closer to Fed targets in August.
Next week: PMI activity measures, NFP job print.

The Dow Jones Industrial Average (DJIA) hit a new record high on Friday, boosted by a cooler-than-expected print in the US Personal Consumption Expenditure (PCE) Price Index for August. Sentiment indicators also improved for September, and rate watchers will turn to next week’s Non-Farm Payrolls (NFP) report.

The PCE price index rose 0.1% in August and led to an increase in PCE inflation of just 2.2% on the year, falling to the lowest level of the key inflation measure since March 2021. Headline inflation numbers continue to is falling toward the Federal Reserve’s (Fed) 2% target, but data watchers will note that the annualized core PCE print rose for the year ended August, rising to 2.7% from 2.6% previously.

The University of Michigan (UoM) consumer sentiment index rose again in September, printing at 70.1, compared to an expected 69.3 and even higher than the previous month’s 69.0. The UoM’s 5-year consumer inflation survey also held steady at 3.1% as high consumer inflation expectations remain pervasive.

With this week’s data file in the books, Fed watchers will be looking forward to the next key data print, next Friday’s NFP jobs report. Overall, markets will look for continued strength is the US labor market to further quell concerns about a potential recession looming over the US economy. US Purchasing Managers’ Index (PMI) economic activity results are also expected early next week.

Dow Jones News

The Dow Jones edged sharply higher on Friday, cutting a fresh record bid, with most of the index’s individual stocks tipping in the green. Only five of the Dow Jones constituents were locked in the red for the day, with Amazon ( AMZN ) down 1.5% to $188 a share. On the upside, Chevron ( CVX ) led the higher charge, rising 2.35% and breaking above the $145 per share level.

Dow Jones Price Forecast

The Dow Jones found a new record bid to end the trading week, hitting a new all-time high of 42.6365 before dipping below 42,500. Despite a regular stream of broken records, the Dow Jones bulls are struggling to make confident climbs, and the bears are waiting just outside the door for an opportunity to pull price action back to the 50-day exponential moving average (EMA) at 40,930.

Dow Jones Daily Chart

Dow Jones FAQ

The Dow Jones Industrial Average, one of the world’s oldest stock indices, is compiled from the 30 most traded US stocks. The index is weighted by price rather than capitalization. It is calculated by summing the prices of the constituent shares and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In subsequent years, it has been criticized for not being broadly representative enough, as it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

Many different factors determine the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in the company’s quarterly earnings reports is the main one. US and global macroeconomic data also contribute as they impact investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA because it affects the cost of credit, on which many corporations depend heavily. Therefore, inflation can be a major factor as well as other indicators influencing the Fed’s decisions.

The Dow Theory is a method of 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 watch for trends where both are moving in the same direction. Volume is a confirmation criterion. The theory uses peak and trough elements of analysis. Dow’s theory posits three phases of a trend: accumulation, when the smart money starts buying or selling; public participation, when the general public joins in; and distribution, when the smart money comes out.

There are several ways to trade the DJIA. One is the use of ETFs that allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A prime example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures allow 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 allow investors to buy one share of a diversified portfolio of DJIA stocks, thereby providing exposure to the overall index.

VaselineSeptember 27, 2024

0 3 minutes read