Dow Jones Industrial Average claws higher but risk appetite weighed down by rate expectations

• Dow Jones recovers 38,000.00 in thin bullish momentum.
• Market expectations for Fed rate cuts are widening.
• Friday’s NFP labor figure to be a key print for rate watchers.

The Dow Jones Industrial Average (DJIA) is up around four-tenths of a percent on Thursday as equity markets grapple with a choppy recovery following a plunge earlier this week. Earnings season is helping to bolster securities that have efficiently bolstered their ratios, and investors are grappling with when to expect a first rate cut from the Federal Reserve (Fed), with a cut in 2024 assumed to be a foregone conclusion.

Wall Street expectations of when and how often the Fed will cut rates are beginning to widen out as investors grapple with a complicated US economic landscape. S&P Global has reduced their Fed outlook to a single quarter-point cut in December, while some investment banks are forecasting as many as four 25-basis-point cuts through the rest of the year beginning as soon as July.

At current cut, the CME’s FedWatch Tool shows rate markets are expecting a first cut from the Fed at the Federal Open Market Committee’s (FOMC) September meeting. Rate markets are giving 40% odds of no cut in September, with 70% odds of at least 25 basis points in cuts by November.

Dow Jones news

Around two-thirds of the securities that comprise the Dow Jones Industrial Average are underwater on Thursday, with 3M Co. (MMM) leading the charge lower, falling 1.4% to $97.08 per share. The topside leaders include megacap names Boeing Co. (BA), Amazon.com Inc (AMZN), and Apple Inc. (AAPL). Boeing rose 3.4% to $177.31 per share, with Amazon climbing 2.45% and Apple gaining around 2%.

Dow Jones technical outlook

The DJIA found a midday high of 38,158.83 on Thursday, with a quick tumble to 37,887.88 as investor risk appetite keeps one foot out of the door. Equities have recovered into the high end, but topside momentum remains thin as the Dow Jones churns in familiar territory close to the 38,000.00 handle.

The Dow Jones is recovering into near-term consolidation, but the index is struggling to develop bullish legs after a near-term decline below 37,600.00. The major equity index is trading well above the 200-day Exponential Moving Average (EMA) at 36,780.52, but the DJIA remains down 4.3% from record highs at the last peak of 39,887.49.

Dow Jones five-minute chart

Dow Jones daily chart