Dow Jones Industrial Average Forecast: DJIA attempts to rebound on Fed-fueled Wednesday

• Dow Jones pares recent declines as Fed Chair Powell bolsters risk appetite.
• Fed Chair Powell doesn’t see high risk of recession, upbeat on inflation.
• US ADP Employment Change misses forecasts.

The Dow Jones Industrial Average (DJIA) tried to steal back recently-lost ground on Wednesday after Federal Reserve (Fed) Chairman Jerome Powell appeared before the US Congressional House Financial Services Committee on Wednesday in the first day of the two-day testimony. Fed Chair Powell noted that the Fed doesn’t see high risk of a US recession, and the Fed is hopeful on inflation eventually achieving the 2% target. 

Market sentiment rose after the Fed head’s statements, dragging equities higher and giving the DJIA room to recover into 38,840.00. The major equity index ran into profit-taking, and the DJIA remains hampered near 38,750.00.

At current cut, Intel Corp. (INC) is up a little over 3% as the best-performing DJIA-listed stock, while the DJIA’s top decliner on Wednesday is Walt Disney Co. (DIS), down 2.8% on the day. Of the 30 components on the DJIA index, 21 are in the green on Wednesday with nine on the low side.

Dow Jones News: Equities catch a bid after jobs come in softer than expected, Fed head Powell testifies

US ADP Employment Change printed below expectations, coming in at 140K for February versus the forecast 150K, while January’s print saw a revision to 11K from the initial print of 107K. Underperforming releases against forecasts are helping to bolster investor bets that the US economy might soften enough to push the Fed closer to cutting rates.

Fed Chair Powell noted that while the Fed is looking for further signs of disinflation before pulling the trigger, the Fed Chairman qualified the position, noting that the Fed is looking for more of what it has already seen in terms of disinflation, and not waiting for deeper signs of inflation easing.

Another NFP Friday looms ahead

The next round of monthly US Nonfarm Payrolls (NFP) is slated for this Friday, and median market forecasts currently expect the print to come in at 200K for February, compared to January’s 11-month peak of 353K. MoM Average Hourly Earnings in February are also expected to ease to 0.3% from the previous month’s 0.6%. 

Before Friday’s labor figures, Fed Chairman Jerome Powell makes his second appearance before the Congressional House Financial Services Committee on Thursday. Nothing new is expected, but markets will be keeping an eye out for any further qualifications on the Fed’s stance heading into NFP Friday.

Dow Jones Industrial Average technical outlook

The upside is increasingly limited on the Dow Jones Industrial Average’s daily candlesticks, with the index struggling to claw back into recent technical highs, and the near-term trend is threatening to fall back into the 50-day Simple Moving Average (SMA) at 38,230.00 for the first time since November.

Despite near-term technical struggles, the DJIA remains firmly buried in bull country, with the major equity index trading well above the 200-day SMA at 35,472.97. If bidders can overcome technical congestion at the 38,800.00 handle, the way will be clear for another push into all-time highs above 39,200.00.

DJIA daily chart