Dow Jones breaches new record on upbeat consumer sentiment

Dow Jones tapped 44,000 for the first time ever on Friday.
Equities are extending a near-term bullish push to wrap up the trading week.
UoM sentiment survey results came in much better than expected.

The Dow Jones Industrial Average (DJIA) rose into fresh all-time highs on Friday, clipping into 44,000 as stocks lean firmly bullish to close out a record week. The Dow had its best week since October of 2023, rising nearly 5% and piercing record bids three days in a row.

The University of Michigan (UoM) Consumer Sentiment Index rose to 73.0 in November, overshooting the expected print of 71.0 and climbing further above October’s 70.5 as polled consumers tilt cautiously optimistic regarding the everall state of the US economy. On the downside, 5-year Consumer Inflation Expectations also ticked higher once again, rising to 3.1% compared to the previous print of 3.0%.

A decisive election win for former President Donald Trump helped to send stocks soaring this week, and a follow-up 25 bps interest rate trim from the Federal Reserve (Fed) kept the gas pedal pinned to the floor. Friday's uptick in consumer outlook survey results only keeps stock traders leaning into the buy button.

Dow Jones news

Over two-thirds of the Dow Jones index found room on the high end on Friday, with most equities ending the week higher than they started. McDonald’s (MCD), Unitedhealth (UNH), and Procter & Gamble (PG) all ended Friday up around 2%, with MCD breaking above $300 per share for the first time in several weeks.

On the low end, Caterpillar (CAT) backslide around 3.5%, falling below $395 per share and extending its earnings miss decline after the company’s revenue fell 4% YoY. According to a statement from Caterpillar, the decline was a result of “lower sales of equipment to end users”, adding on that “changes in dealer inventories had an unfavourable impact to sales volume.”

Dow Jones price forecast

With the Dow Jones holding stubbornly in record high territory, a technical case for short momentum appears frustratingly impossible. By all measures, the DJIA is pinned far too deep into overbought territory to consider a fresh bid, but continued topside momentum has left the chart entirely absent any technical short entry points.

“Winners keep winning” is the approach to a long-run Dow Jones bullish trend. The major equity index has entirely outpaced its own 200-day Exponential Moving Average (EMA) for an entire year. Despite a brief reprieve in October, the Dow Jones has continued its one-sided bullish tilt, closing in the green for all but two of the last 11 consecutive months and on pace to chalk in another gain month in November as long as bidders maintain their balance.

Dow Jones daily chart

Economic Indicator

Michigan Consumer Sentiment Index

The Michigan Consumer Sentiment Index, released on a monthly basis by the University of Michigan, is a survey gauging sentiment among consumers in the United States. The questions cover three broad areas: personal finances, business conditions and buying conditions. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. The University of Michigan survey has proven to be an accurate indicator of the future course of the US economy. The survey publishes a preliminary, mid-month reading and a final print at the end of the month. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Why it matters to traders?

Consumer exuberance can translate into greater spending and faster economic growth, implying a stronger labor market and a potential pick-up in inflation, helping turn the Fed hawkish. This survey’s popularity among analysts (mentioned more frequently than CB Consumer Confidence) is justified because the data here includes interviews conducted up to a day or two before the official release, making it a timely measure of consumer mood, but foremost because it gauges consumer attitudes on financial and income situations. Actual figures beating consensus tend to be USD bullish.

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