Market Data 
- Dow Jones taps a new record high despite thin volumes.
- Moves in equities remain limited as investors recover from Fed splurge.
- Key US inflation data looms large at the end of the week.
The Dow Jones Industrial Average (DJIA) slipped higher to test a new record high of 41,419.65 on Monday, but investors are still recovering from last Friday’s surge after the Federal Reserve (Fed) all but confirmed that a new rate-cutting cycle would kick off in September.
US Durable Goods Orders helped to keep physical production stocks bid on Monday despite a general decline in the usual darling tech sector. US Durable Goods Order in July rallied a surprising 9.9% MoM, well above the forecast 4.0% and entirely reversing the previous month’s revised -6.9% contraction.
Despite the upswing on Durable Goods Orders, some trepidation remains; excluding Transportation spending, Durable Goods Orders actually contracted -0.2% MoM, worse than the forecast 0.0% and the previous month’s tepid 0.1%, which was revised down from 0.5%.
Most of the trading week will be a quiet affair on the economic calendar. Q2 US Gross Domestic Product (GDP) figures are slated for Thursday, but are broadly expected to hold steady at 2.8% on an annualized basis. Friday could be a kicker for markets that are increasingly focused on the timing and pace of rate cuts from the Fed, with July’s US core Personal Consumption Expenditure – Price Index (PCE) inflation print set to hold steady at 0.2% MoM. The YoY PCE inflation figure is actually expected to tick upwards to 2.7% from 2.6%, but investors are confident that inflation has made enough progress towards the Fed’s 2% target that it will count as “close enough” to still keep the way open to a first rate cut on September 18.
Dow Jones news
Caterpillar (CAT) is moving higher on Monday in sharp contrast to the wider market. The NASDAQ and S&P 500 sold off on Monday morning, while Caterpillar and a number of other Dow Jones index stocks gained ground. The Dow, in fact, reached yet another all-time high at 41,420 on Monday, following last week’s decent Dow performance.
Read more: Caterpillar helps Dow Jones buck tide at start of eventful week
Dow Jones price forecast
Intraday price action sees some churn on an overall quiet Monday. Bids managed to clip into a fresh all-time high above 41,400.00 to kick off the new trading week, but the overall day is still tilted toward the low side as bulls try to run on empty.
The Dow Jones has chalked in an impressive 7.9% win streak since the first week of August, climbing from a swing low to 38,382.90 to etch in a fresh all-time high at 41,419.65. Despite the impressive run that tilted entirely into the bullish side, momentum is set to drain out of the index quickly as bidders run out of runway. The Dow Jones is poised for a relief pullback towards the 50-day Exponential Moving Average (EMA) at 39,946.29.
Dow Jones daily chart
Economic Indicator
Durable Goods Orders
The Durable Goods Orders, released by the US Census Bureau, measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The final figure shows the state of US production activity. Generally speaking, a high reading is bullish for the USD.
Last release: Mon Aug 26, 2024 12:30
Frequency: Monthly
Actual: 9.9%
Consensus: 4%
Previous: -6.6%
Source: US Census Bureau
