Dow Jones Industrial Average roils on Monday ahead of busy Fed week

• Dow Jones churns chart paper as investors jostle for position ahead of Fed.
• Fed set to hold rates steady this week, markets on the lookout for forward guidance.
• Investors have fully priced in a rate trim in September.

The Dow Jones Industrial Average (DJIA) spun in circles on Monday, churning around 40,600.00 as investors buckle down for the wait to the Federal Reserve’s (Fed) latest rate call. The Fed is broadly expected to hold rates steady on Wednesday, but markets will be keeping an eye out for any adjustments to forward guidance ahead of the key September rate call.

The Fed’s upcoming rate call on Wednesday will be closely watched as investors look for signs that the Fed is on pace to deliver a hotly-anticipated rate cut when the Federal Open Market Comittee (FOMC) convenes again in September. Markets are broadly anticipating at least a quarter-point rate cut on September 18, with rate markets pricing in 90% odds of a 25 bps trim and hopeful 10% bets for a double-cut according to the CME’s FedWatch Tool.

US Nonfarm Payrolls (NFP) are also due on Friday, a key component of the Fed’s employment mandate and investors will be looking for a continued cooling in hiring figures to help keep pushing the Fed into a new rate-cutting cycle in September. ADP Employment Change figures for July will be published on Wednesday, and will serve as a forecast for Friday’s NFP jobs report, albeit a shaky one with a spotty track record for accuracy.

Dow Jones news

The Dow Jones is stuck in the midrange amid quiet Monday trading, with roughly half of the index in the green for the day and the other half easing into the low end. McDonald’s Inc. (MCD) reported a miss in quarterly revenue and earnings per share, but the stock rallied 4.4% and rose above $263.00 per share as the company vows to make more efforts to engage in competition by taking a “forensic look” at pricing options and expects per-restaurant traffic to increase with the addition of value offerings. 

Dow Jones technical outlook

The Dow Jones is holding steady near the 40,600.00 handle on Monday, cycling in a tight range for the day as investors grapple with keeping a near-term recovery on-balance. The DJIA briefly tumbled below the 40,000.00 major price handle last week after US markets pulled back from record highs.

The Dow Jones dug in its heels to put in a fresh near-term bottom near 37.395.00, but is still trading on the low side of recent record highs set at 41,371.38. Long-term momentum still leans firmly into the bullish side as the Dow Jones trades well above the 200-day Exponential Moving Average (EMA) at 38,011.80.

Dow Jones daily chart