Dow Jones Industrial Average churns as investors look ahead to midweek Fed appearance

June 10, 2024 7:15 pm

Dow Jones sticks close to Monday’s opening bids in thin action.
Markets looking for a recovery after NFP Friday hangover.
Wednesday brings US CPI update, Fed rate call and interest rate expectations.

The Dow Jones Industrial Average (DJIA) is churning chart paper on Monday, paddling around 38,750.00 as investors look for a reason to recover footing after last Friday’s Nonfarm Payrolls (NFP) rout that saw broad-market rate cut hopes wither on the vine.

Investors will be buckling down for the wait to Wednesday’s latest showing from the Federal Reserve (Fed). The Fed is broadly expected to stand pat on interest rates this week, but markets will be scrambling to see the updates to the Fed’s “dot plot”, or summary of interest rate projections.

US Consumer Price Index (CPI) inflation figures are also due on Wednesday. Investors are hoping that MoM headline CPI inflation will ease to 0.1% from 0.3%, but Core CPI is forecast to hold flat at 0.3% MoM.

Dow Jones news

The DJIA is mixed on Monday, with about half of its securities in the green and the other half falling back slightly. Walmart Inc. (WMT) is rising to the top of the pile, climbing 1.37% on Monday to $66.78 per share as investors lean into the retailer, confident that Walmart’s pivot into online retail and targeting higher-income individuals will increase market share.

On the low side, Visa Inc. (V) fell -1.53% on Monday, declining to $274.39 per share on the day. Visa is facing downward pressure after investors noted that insiders have been dumping Visa shares over the last year, with very little buying activity. Visa insiders currently own about 0.05% of the entire company, which is an incredibly low ratio for people who operate at the management level.

Dow Jones technical outlook

The Dow Jones is looking for a foothold on Monday, holding above 38,700.00 despite a lack of upwards momentum. The major index is still down from Friday’s peaks near 39,100.00, and June’s near-term bullish rebound could be coming under threat.

The Dow Jones is still steeply off of record highs above 40,000.00, but a demand zone below 38,000.00 is providing firm long-term bullish pressure, keeping the index elevated well above the 200-day Exponential Moving Average (EMA) at 37,318.74.

Dow Jones five minute chart

Dow Jones daily chart

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).