The Dow Jones Industrial Average (DJIA) closed above the 40,000.00 major handle for the first time ever after markets wound down a hectic trading week that saw rate cut hopes return to the forefront after US Consumer Price Index (CPI) inflation eased to a three-month low. 

depositphotos

Easing inflation figures sparked a risk appetite rally that sent the Dow Jones over the 40,000.00 major price handle on Thursday as investors pin their hopes and dreams on the Federal Reserve (Fed) delivering at least two rate cuts before the end of the year.

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.

Dow Jones news

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. According to Wells Fargo analyst Christopher Harvey, as quoted by CNBC Markets, 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.

Two-thirds of the Dow Jones' constituent equities ended Friday in the green, with Caterpillar Inc. (CAT) leading the winners, climbing 1.58% on the day and settling at $356.27. On the low side, Amgen Inc. (AMGN) fell -0.71% to end Friday at $312.47 per share.

Dow Jones technical outlook

The Dow Jones Industrial Average closed just above 40,000.00 on Friday, etching in the highest-ever close for the major index. The DJIA also marked in a fourth consecutive bullish week, and the index is up over 6.5% in 2024.

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 (EMA) at 37,067.12.

Dow Jones Five Minute chart

Dow Jones Daily chart

What is the Dow Jones?

The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

More By This Author:

AUD/JPY Remains Below 104.00 After Mixed Economic Data From China
NZD/USD Price Analysis: Bulls Gather Traction And Brighten The Outlook, Indicators Hit Overbought Conditions
Silver Price Analysis: Reaches new high for May but pulls back after becoming overbought