The Dow Jones Industrial Average is higher on Wednesday as stocks extend the rally

• The Dow Jones added three-quarters of a percent on Wednesday, climbing more than 300 points.
• Stocks are rebounding after early week declines.
• Stocks weigh on wholesale inventory data and Fedspeak ahead of final minutes of FOMC meeting.

The Dow Jones Industrial Average (DJIA) rallied another 300 points on Wednesday, extending an upbeat turnaround after a decline earlier in the week that briefly sent the major stock index back below 42,000. The midweek market session sees investors snapping up deals despite a thin print in August wholesale inventories and a tepid appearance from Federal Reserve (Fed) Bank of Dallas President Lorie Logan.

U.S. wholesale inventories rose less than expected, rising a tad 0.1 percent versus expectations for holding on to July’s 0.2 percent figure. However, there was a mixed print between the numbers: while inventories of non-usable goods fell, falling 0.1% versus an anticipated 0.5% increase. Meanwhile, inventories of durable goods rose much faster than expected, rising 0.3% from 0.1% in the previous month, as US consumers devote more of their consumption to non-durable goods and avoid investing in purchases on long term.

Dallas Fed President Lorie Logan hit the headlines Wednesday morning, trying to get investors to focus back on inflation risks that continue to be in the dark. Despite rate cut-hungry markets clamoring for more rate cuts to follow September’s 50 bps rate cut, Dallas Fed President Logan noted that economic growth that continues to run above forecasts poses a risk very real for inflation. While US inflation has made significant progress toward the Fed’s 2% annual target, price growth in key core categories continues to be stronger than expected.

The minutes of the Federal Open Market Committee (FOMC) meeting from the September rate call are due later in the US market session; while little news is expected from the document, investors will no doubt be looking over the Fed’s internal communications about rate expectations. Traders will be looking for more clues on how the Fed feels about further rate cuts later in the year, despite a steady stream of hot talking points from various Fed officials in recent days.

Rate markets are currently pricing in a perfectly pedestrian 25 bps rate cut in November. However, according to CME’s FedWatch tool, rate traders still see a 15 percent chance that the Fed will not move rates at all on Nov. 7.

Dow Jones News

Equity markets went into full bull mode on Wednesday, with all but four of the Dow Jones constituent stocks in the green during the US market session. IBM ( IBM ) rose more than 2% to climb to $238 a share, with Nike ( NKE ) following suit, rising 2% to top $82.50 a share.

On the downside, Boeing ( BA ) continues to struggle with an ongoing workers’ strike. Things got complicated for the embattled aerospace company after the Boeing workers’ union rejected a recent proposal.

Dow Jones Price Forecast

The Dow Jones continues to outperform its own averages, grinding the chart north of the 50-day exponential moving average (EMA) and staying near record highs. With price action stuck near the high bids since late September, and a pullback that essentially went nowhere, momentum indicators are poised for another reversal of buy signals.

The Dow Jones remains up about 6.25% from its September swing low to the major 40,000 points, with intraday stocks passing just above 42,000. The main stock index has returned 12.75% YTD, half of those gains since September alone.

Dow Jones Daily Chart