Dow Jones Pauses for Breath Ahead of Fed Decision

The Dow Jones Industrial Average traded in a narrow range on Thursday, holding near its record high. Investors are adopting a cautious stance as they await the Federal Reserve’s interest rate decision later in the day.

The market’s anticipation of a 25 basis point rate cut from Fed Chair Jerome Powell has been largely priced in. According to the CME’s FedWatch Tool, there’s a 99.1% probability of such a move. However, uncertainty remains regarding the Fed’s future policy path. Some market participants are betting on an additional 25 basis point cut in December, while others believe the Fed may pause after the November meeting.

Market Movers

• Intel (INTC): Shares of Intel rebounded after the company’s removal from the Dow Jones Industrial Average. The market’s reaction suggests that investors may have anticipated a more significant sell-off following the news.
• JPMorgan Chase (JPM): Shares of JPMorgan Chase declined, pulling back from recent gains. The pullback could be attributed to profit-taking after the stock’s strong performance following the election.

Technical Outlook

The Dow Jones has experienced a significant rally this year, driven by optimism surrounding the economic outlook and the Fed’s easing monetary policy. However, as the index approaches its all-time high, some analysts are concerned about a potential correction.

The 50-day Exponential Moving Average (EMA) near the 42,000 level could provide support in case of a pullback. However, the lack of clear technical signals and the strong bullish momentum make it difficult to accurately predict the market’s near-term direction.

Economic Data

The University of Michigan’s Consumer Sentiment Index, scheduled for release on Friday, will provide further insights into consumer confidence and spending habits. Economists expect the index to rise slightly from the previous month’s reading.

Overall, the Dow Jones’s near-term performance will likely depend on the Fed’s interest rate decision and its accompanying commentary. While a rate cut is widely anticipated, investors will be closely watching for any indications of future policy tightening or easing.