Dow Jones Industrial Average bolstered by US CPI inflation into a second day of gains

• The Dow Jones climbed 260 points on Wednesday post-CPI inflation print.
• US consumer-level inflation eased as expected in July.
• Market bets of a September rate cut remain high, but markets were hoping for more.

The Dow Jones Industrial Average (DJIA) gained 260 points on Wednesday after US Consumer Price Index (CPI) inflation ticked lower on an annualized basis, as markets had broadly hoped. However, some investors had higher expectations for this round of US CPI inflation after US producer-level inflation dropped faster than expected earlier this week.

Headline US CPI inflation printed at 2.9% YoY in July, slightly below the forecast hold at 3.0%, with core CPI inflation ticking down to 3.2% on an annualized basis from the previous 3.0% as markets had expected. Monthly CPI figures, both headline and core, rose 0.2% MoM in July, but even this figure was a round-up print from the data rates of 0.15% and 0.17% for headline and core CPI, respectively.

Despite easing consumer-level inflation figures, investors had been hoping for prints further below forecasts after this week’s US Producer Price Index (PPI) inflation showed steeper-than-expected drops in producer-level price pressures. However, easing price pressures don’t appear to be passing onto consumers on a one-to-one basis. According to the CME’s FedWatch Tool, rate markets are now pricing in only 40% odds of a double-cut from the Federal Reserve (Fed) on September 18, down from 50% earlier this week and 70% the week previous.

Dow Jones news

Most of the Dow Jones index is in the green on Wednesday with four-fifths of the equity board climbing post-US CPI. Losses were contained in a core group of recent straggles, with Intel Inc. (INTC) leading the charge lower, falling -2% on the day to $20.00 per share. Home Depot Inc. (HD) claimed the top of the Dow Jones on Wednesday, rising 2.5% and testing $360.00 per share.

Dow Jones price forecast

A second straight day of gains has the Dow Jones index retesting the 40,000.00 major price handle, but bidders will need to put in more work to shove intraday price action north of the key technical level after running out of gas and falling back from 40,040.00.

Wednesday’s gains put the Dow Jones back on the north side of the 50-day Exponential Moving Average (EMA) at 39,593.00. The index is also up 4.3% from a recent bottom near 38,383.00, and buyers have their eyes set on reclaiming all-time highs above 41,200.00 set in July.

Dow Jones five minute chart

Dow Jones daily chart