- Dow Jones jumped a full percent after CPI inflation cooled before receding to flat.
- Fed watchers on high alert as “Dot plot” update looms ahead.
- Fed rate call broadly expected to hold as investors wrestle with September cut odds.
The Dow Jones soared over 350 points in early Wednesday trading after US Consumer Price Index (CPI) inflation receded faster than expected, but investors are pulling back ahead of the Federal Reserve’s (Fed) latest rate call that will bring a hotly-anticipated update to the Fed’s “dot plot” of Interest Rate Expectations. With the Fed still due on Wednesday, the Dow Jones has pulled back to the day’s opening bids near 38,780.00.
US Federal Reserve Decision Preview: All eyes on the interest-rate outlook, dot plot crucial
US CPI inflation cooled to 0.0% MoM in May, below the forecast 0.1% and receding even faster from the previous month’s 0.3%. Core CPI ticked down to 3.4% YoY, below the forecast 3.5% and dropping away from the previous period’s 3.6%. With CPI inflation figures easing further, investor sentiment is leaning further into hopes of a September rate cut.
According to the CME’s FedWatch Tool, rate markets are now pricing in 70% odds of the Fed trimming rates at least 25 basis points on September 18, but Wednesday’s Fed outing is reigniting some caution.
Dow Jones news
The Dow Jones is roughly on-balance on Wednesday but tilted towards the lower side. 20 of the index’s 30 securities are leaning into the red ahead of the Fed, with Nike Inc. (NKE) leading the crowd lower, falling -1.8% to $94.14 per share. Apple Inc. (AAPL) is extending a broad climb as investors pin their hopes on Apple’s announced integration of ChatGPT into their operating software. AAPL is up 4.11% on Wednesday, climbing to $215.83 per share.
Dow Jones technical outlook
Wednesday’s CPI-fueled rally briefly peaked above 39,120.00 before risk appetite chilled and sent the Dow Jones back into the day’s opening range near 38,790.00. The major equity index remains mired in near-term congestion at the 200-hour Exponential Moving Average (EMA) at 38,866.60. Bidders have manage to price in a technical rebound from the week’s low bids near 38,400.00, but technical resistance is building from multiple rejections from chart regions north of the 39,000.00 handle.
Dow Jones hourly chart
Dow Jones daily chart![]()
Economic Indicator
Fed Interest Rate Decision
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
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Next release: Wed Jun 12, 2024 18:00
Frequency: Irregular
Consensus: 5.5%
Previous: 5.5%
Source: Federal Reserve
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