Published: Friday, May 17, 2024
Dow Jones ends the week at over 40.000.00, a gain of 130 points.
The record equity gains that were expected to come from the rate cuts may not last.
Fedspeak is still a key focus for the markets.
After a busy trading week, the Dow Jones Industrial Average (DJIA), for the first ever time, closed above the 40,000.00 handle. This was after the US Consumer Price Index (CPI), inflation fell to a 3-month low. The Dow Jones Industrial Average (DJIA) crossed the major price handle of 40,000.00 on Thursday, as investors pinned their hopes on the Federal Reserve to deliver at least two rate reductions before the end the year.
Read more about Fed officials acknowledge overall inflation progress but remain cautious
Fed officials continue to talk down market expectations despite this week’s easing of inflation. Michelle Bowman, a member of the Fed Board of Governors, warned investors late on Friday that inflation progress in 2024 had not been as positive as some hoped. Fed Governor Bowman believes that inflation will remain higher than the markets anticipate, and further rate increases are possible if inflationary pressures begin to show up in the data.
Dow Jones News
Analysts have begun to warn that despite record-breaking gains in the major US indices, the run-up could cause volatility near-term. CNBC Markets quoted Wells Fargo’s Christopher Harvey as saying that investors should be prepared for some market volatility as the investor narrative of good news (rate reductions) resulting from bad news (easing conditions) begins to unravel.
Caterpillar Inc., the Dow Jones constituent stock, led the way with a gain of 1.58% and a closing price of $356.27. Amgen Inc., (AMGN), fell -0.71% on Friday to close at $312.47.
Dow Jones Technical Outlook
The Dow Jones Industrial Average reached a high of 40,000.00 dollars on Friday. This was the largest ever close for this major index. The DJIA has also had a fourth straight bullish week. It is now up 6.5% by 2024.
The Dow Jones has gained over 1% in the past week. A bullish close on Friday will mean that the index has gained for 12 trading days straight, with the exception of two. The DJIA is trading above the 200-day Exponential moving average (EMA) of 37,067.12, indicating that bulls are still in charge.
Dow Jones Five Minute Chart
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average is one of the oldest stock exchange indices around the globe. It is composed of the 30 stocks that are most actively traded in the US. The index is weighted based on price rather than capitalization. The index is calculated by adding up the prices of all the stocks in the index and dividing by a current factor of 0.152. Charles Dow founded the index, as well as The Wall Street Journal. It was criticized in later years for not being representative enough, as it only tracked 30 conglomerates. This is unlike other indices like the S&P 500.
The Dow Jones Industrial Average is driven by many different factors. The main factor is the aggregate performance of component companies as revealed by quarterly earnings reports. US and global macroeconomic information also has an impact on investor sentiment. The Federal Reserve’s (Fed) interest rate level also affects the DJIA, as it impacts the cost of credits, which is heavily relied upon by many corporations. Inflation can also be a key factor, as well as many other metrics that influence Fed decisions.
Dow Theory is an indicator of the main trend in the stock market that Charles Dow developed. The key is to compare both the Dow Jones Transportation Average and the Dow Jones Industrial Average and follow only trends that are in the same direction. Volume is an important confirmatory criterion. The theory is based on peak-and-trough analysis. Dow’s Theory posits that there are three phases of a trend: accumulation (when smart money begins buying or selling), public participation (when the public gets involved) and distribution when the smart money leaves.
There are several ways to trade in the DJIA. The first is by using ETFs, which allows investors to trade the DJIA in a single security rather than buying shares of all 30 constituent companies. The SPDR Dow Jones Industrial Average (DIA) is a good example. DJIA Futures Contracts allow traders to speculate about the future value of indexes. Options give the right but not the obligation to buy or to sell the index in the future at a set price. Mutual funds allow investors to purchase a share in a portfolio of DJIA stock, giving them exposure to the index.
These pages contain forward-looking statements, which are subject to risks and uncertainties. The markets and instruments featured on this page should only be used for informational purposes and not as a recommendation. Before making any investment decision, you should conduct your own research. FXStreet cannot guarantee that the information provided is error-free or free of material misstatements. This information cannot be guaranteed to be timely. Open Markets investing involves significant risk. This includes the possibility of losing all or part of your investment as well as experiencing emotional distress. You are responsible for all risks, costs, and losses associated with investment, including the total loss of your principal. The opinions and views expressed in this piece are those of its authors, and may not reflect FXStreet or its advertisers’ official policies. The author is not responsible for the information found at links on this page.
The author does not hold any position in the stock or company that is mentioned. This article was not written for compensation by the author, but rather FXStreet.
FXStreet or the author does not make personalized recommendations. The author does not make any representations about the accuracy, completeness or suitability this information. FXStreet or the author are not liable for errors, omissions, or any injuries, damages, or losses arising from its display or usage. Except for errors and omissions.
This article does not contain investment advice. The author of this article and FXStreet do not hold any investment advisor registrations.
Source: FXStreet