Dow Jones claws back ground after US CPI print

The Dow peaked 200 points higher in a midweek rebound.
US CPI inflation held steady and accelerated on the backend, but met expectations.
Equities continue to hold ground on the high end after the post-election rally.

The Dow Jones Industrial Average (DJIA) clawed back over 200 points at its peak on Wednesday, recovering ground after an early-week plunge from record highs. The post-election rally following presidential candidate and former President Donald Trump sent markets into dizzying new heights, but investors remain unwilling to let prices fall too far back despite the clear need for a breather.

US Consumer Price Index (CPI) inflation figures came in stickier than many had hoped, but still well within median market forecasts, helping to keep investor sentiment elevated. Headline CPI held steady at 0.2% MoM as expected, while annualized headline CPI inflation accelerated to 2.6% YoY from the previous 2.4%, as markets predicted. Core CPI inflation also met market expectations, holding at 0.3% MoM and 3.3% on an annualized basis.

Dow Jones news

Despite a notable lack of inflation easing in October’s CPI figures, investors remain confident during the midweek market session, with around two-thirds of the Dow Jones finding positive territory for the day. Boeing (BA) still found the red, declining around 2.5% and sliding below $142 per share as the battered airospace manufacturer begins issuing layoff notices as part of the company’s plans to layoff 17,000 workers, or an entire tenth of the airplane builder’s global workforce.

On the high side, Amazon surged to a fresh all-time high on Wednesday, breaching $215 dollars per share. The mega-conglomerate that covers everything from internet and cloud computing services to online retailing is surging after Amazon announced plans to begin their own production system for AI-focused computer chips in a bid to take a chunk out of Nvidia’s market share in the large data modeling space. Amazon has also announced plans to launch a discount e-commerce segment of their large-frame warehousing and online retailing segment, directly targeting the growing sector currently dominated by social media adspace scourge Temu.

Elsewhere on the Dow Jones equity board, Home Depot (HD) is marching its way back toward $410 per share in a post-glut rebound after shedding weight recently on the back of declining sales figures.

Dow Jones price forecast

The Dow Jones launched into a fresh round of bullish pressure last week, breaching into new record highs a stone’s throw away from 44,500. This week saw a brief pullback from record highs as lopsided bullish momentum began to spark concerns of overbought conditions. Despite the Dow Jones’ one-sided chart performance, bidders continue to pile into the space, keeping the battle constrained to chart paper near the 44,000 handle.

The Dow Jones is up nearly 20% bottom-to-top for the year, and has added an eye-watering 31.5% since the last time price action touched the 200-day Exponential Moving Average (EMA) near the 34,000 handle in November of 2023. Short interest is circling the waters, looking for a low-pressure fallback to the 50-day EMA near 42,330, but downside momentum remains elusive.

Dow Jones daily chart

Economic Indicator

Consumer Price Index (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

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