The Dow Jones is approaching all-time highs on Friday

• The Dow Jones returns to record highs on Friday.
• US markets are firmly resting on bets on a 50 bps cut from the Fed.
• Mixed US sentiment figures keep investor sentiment high.

The Dow Jones Industrial Average rose for a third straight day on Friday, climbing more than 300 points to hit record highs above 41,500 as market sentiment leaned further on hopes of a rate cut. According to CME’s FedWatch tool, rate traders are pricing in a 45% chance of an initial 50bps rate cut from the Federal Reserve (Fed) when the US central bank meets for its rate decision on September 18 .

The University of Michigan’s consumer sentiment index rose to 69.0 in September, hitting a four-month high, as surveyed consumers’ outlook on the U.S. economy slowly improved after months of declining economic expectations. The upward tilt in the UoM survey results helped anchor expectations for a rate cut next week, despite the UoM also noting a rise in 5-year consumer inflation expectations to 3.1% in September from 3.0 % previously.

US export and import price indices also fell more strongly than expected in August, with the export price index posting a -0.7% decline versus -0.1% expected, reversing the 0.5 % from the previous month as inflationary pressures appear to be easing in terms of trade. The August import price index contracted by 0.3%, below the expected value of -0.2% and down from 0.1% in the previous period.

Dow Jones News

With stocks resting firmly on hopes of a rate cut, the Dow is broadly in the green on Friday, with all but three of the DJIA’s constituents rising to end the trading week. Gains were led by Caterpillar Inc ( CAT ) and Home Depot Inc ( HD ), both shares up nearly 2% on the day. Caterpillar is testing above $346 per share, while Home Depot is above $381 per share for the first time since March.

Elsewhere in the Dow, Boeing Co ( BA ) faced steep declines on Friday, falling to a -3.5% daily performance and falling to $157 a share, as the planemaker sees its first workers’ strike in the last 15 years.

Dow Jones Price Forecast

The Dow Jones is within a stone’s throw of new all-time highs, testing 41,500, eyeing the late August record bid of 41,574. The Dow Jones is up nearly 4% over the past three days, rebounding from a short-term dip below its 50-day exponential moving average (EMA), hitting a technical rally at 39,989.

Dow Jones Daily Chart