Dow Jones Industrial Average climbs back over 38,300 as investors shrug off still-high PCE inflation

• Dow Jones determined to wrap up Friday in the green despite stubborn inflation.
• US PCE inflation remained higher than expected.
• Hopes for rate cuts now lean heavily on next week’s US NFP print.

The Dow Jones Industrial Average (DJIA) churned on Friday before pushing into the high end for the day as investors shake off still-high US Personal Consumption Expenditure (PCE) Price Index inflation. Markets are still pricing in a 44% chance of at least two rate cuts from the US Federal Reserve (Fed) this year, with 60% odds of a first rate trim in September according to the CME’s FedWatch Tool.

Read more: US Core PCE inflation holds steady at 2.8% vs. 2.6% expected

US Core PCE Price Index inflation held steady at 2.8% for the year ended in March, holding above the forecast decline to 2.6%. Headline PCE Price Index inflation also rose to 2.7% over the same period, climbing from 2.5% and accelerating above the forecast 2.6%.

Despite the uptick in a key inflation metric, market risk appetite remains high and rate markets are leaning into current rate cut expectations. Despite still-high inflation, price growth is still lower than many investors feared, and market participants will be increasingly focused on next Friday’s US Nonfarm Payrolls (NFP) report. A still-tight US labor market will have investors looking for slack in US labor figures to help push the Fed towards a first rate cut by September.

Dow Jones news

With earnings season in full swing, equities remain bullish overall as the trading week draws to a close. Two-thirds of the 30 securities that comprise the Dow Jones are in the green on Friday, with Amazon.com Inc. (AMZN) up around 3.7% at the time of writing and trading near $180.10 per share. Microsoft Corp. (MSFT) follows closely behind, gaining about 2.75% on the day to trade around $410.00 per share.

On the downside, Intel Corp. (INTC) is leading the Dow Jones board into the red, declining 9.7% to trade at $31.70 per share after the tech company released a weaker-than-expected forecast for the current quarter. Intel is expecting quarterly revenue between $12.5 and $13.5 billion, whereas market forecasts were hoping for at least $13.6 billion. Intel also expects adjusted earnings per share to fall below Wall Street forecasts.

Dow Jones technical outlook

The Dow Jones is trading well within the week’s price range, setting Friday’s low bids at 38,048.33 before recovering into an intraday high of 38,335.71. The major equity index is still down slightly from the week’s peak prices at 38,556.80, but is recovering firmly after setting the week’s lows at 37,745.54 on Thursday’s pullback.

The Dow Jones is set to snap a three-week losing streak, and on pace to close just north of the 38,300.00 handle after a 5.8% decline top-to-bottom from 39,887.49 that began in mid-March.

Dow Jones five-minute chart

Dow Jones hourly chart