Dow Jones Industrial Average tests new high as Fed rate call looms

• The Dow Jones hit a new all-time high during Monday’s trading.
• Despite the stretch to the upside, stocks remain generally warm.
• Investors are pulling away in anticipation of Wednesday’s Fed call.

The Dow Jones Industrial Average (DJIA) posted another intraday record bid to start the new trading week. The biggest stocks on the New York Stock Exchange (NYSE) rose on Monday ahead of the Federal Reserve’s (Fed) interest rate call on Wednesday, which is expected to be the Fed’s first rate cut since March 2020.

According to investors, the Fed launching a new cycle of interest rate cuts is almost a given, and now it comes down to a debate about how much, rather than when. According to CME’s FedWatch tool, rates traders are pricing in about a 60% chance that the Fed’s first rate cut in over four years will be a 50bps cut in the Fed funds rate, with the remaining 40% expecting a more modest 25bps cut . Rate markets are also pricing in a total of 125-150 bps of cuts by the end of the year, with interest rate traders seeing about an 80% chance that the Fed funds rate will hit a total of 400-425 bps by December 18 compared to the current one. interest rate of 525-550.

US retail sales are scheduled for an update on Tuesday, but the key data point that would normally generate some level of volatility is not expected to move the needle this week unless the print doesn’t line up with forecasts. US MoM retail sales growth in August is expected to fall to 0.2% from July’s 1.0%, while MoM core retail sales (excluding auto purchases) are expected to fall to 0 .3% from 0.4%.

Dow Jones News

Despite a generally tepid tone in US stocks on Monday, the Dow Jones edged up around 130 points and added 0.3% to its current average near 41,500. The DJIA made a fresh bid of 41,738 before settling as investors bide their time.

Intel Corp ( INTC ) added 2.5 percent, climbing more than $20 a share after it was revealed that the chipmaker was to receive a $3.5 billion grant from the U.S. government to produce chipset- uri for the US military and the Pentagon. Despite Monday’s pop, INTC is barely off more than ten-year lows and has yet to recover from missing an earnings call in August. A technical recovery has yet to materialize after the silicon giant gleefully announced it will cut more than 15,000 jobs in a bid to appease shareholders and try to stem the nearly 60% YTD decline in the company’s stock.

On the low, Apple Inc ( AAPL ) fell -3.3% to $215 a share after reports emerged that demand for the company’s 16th iteration of its iPhone platform could not be as big as many anticipated. According to analysts, key AI-based features that Apple has relied on to revive sales numbers are not yet publicly available, flattening phone sales. At the same time, extended delivery times further shake off potential buyers. Sales for the company’s latest annual handset upgrade fell 12 percent from last year, according to analysis by TF Securities.

Dow Jones Price Forecast

Despite an overall tepid stance toward Monday’s stock trading, the Dow Jones is still finding plenty of room on the bidding side, hitting a new all-time high and rounding the corner on a fourth straight trading day of gains. The major stock index has recovered nearly 4.4% from the bottom to the top since last week’s low below 40,000.

With the DJIA bouncing back above its rising 50-day exponential moving average (EMA) to 40,450, the stock is squarely planted on the bullish side, although long-term bidders will be wary of price action cycling familiar technical levels. It’s not the first time the Dow Jones has topped out ahead of major news events, and short-term memory issues notwithstanding, buyers can still recall July’s bumpy -7.2% plunge from previous highs.

Dow Jones Daily Chart