Dow Jones marginally rises on quiet Friday trading

With a marginal increase, Dow Jones seems unchanged on quiet Friday, although it was still significantly below its recent record highs. Record stock gains fueled by expectations of a rate cut may not last long. Fed policymakers are still a major selling factor for the markets. As the markets conclude a busy trading week, expectations of a rate cut have returned to the forefront following a three-month low in US Consumer Price Index (CPI) inflation.

Dow Jones is currently trading higher. Although investors place their hopes and dreams on the Federal Reserve (Fed) delivering at least two rate cuts before the end of the year, the Fed’s easing of inflation numbers prompted a risk appetite rally that drove the Dow Jones above the 40,000.00 key price handle on Thursday.

Despite easing inflation data this week, Fed officials have routinely talked down still-high market expectations. Fed Board of Governors member Michelle Bowman hit markets late in the Friday market session with cautionary comments highlighting that progress on inflation in 2024 has not been as good as many had hoped. Fed Governor Bowman also sees inflation remaining higher than markets expect, highlighting that further rate hikes are not off the table if inflationary pressures return to the data.

Despite record prints across the major US indexes, analysts have started to flash warnings signs that the record run-up in equities could lead to near-term volatility. Investors should expect some choppiness in markets as the current investor narrative of bad news (easing economic conditions) meaning good news (rate cuts) could begin to unravel.

A little less than half of the 30 securities listed on the Dow Jones are lower on Friday, but losses are lean with the loss leader Intel Corporation, down -1.11% to $31.68 per share. Gainers are equally sedate heading into the trading week’s close, with Walmart Inc, JPMorgan Chase & CO, and Caterpillar Inc all up around 1% on the day.

The Dow Jones is trading on the low side of the 40,000.00 on Friday after Thursday’s record bidding action, but pullbacks remain limited and the major index is close to 39,900.00. The Dow Jones’ record high of 40,042.54 this week remains close by, and a technical floor is priced in above 39,800.00.

The Dow Jones is up over 1% for the week, and a bullish Friday close will mean the index has gained ground for all but two of the last 12 consecutive trading days. Bulls remain firmly in control with the DJIA trading well above the 200-day Exponential Moving Average at 37,067.12.