Dow Jones Industrial Average waffles on quiet Monday

• Dow Jones held close to the middle on a thin start to the new trading week.
• Equities to remain nervous ahead of key inflation data.
• Fresh batch of US PPI and CPI inflation prints due this week.

The Dow Jones Industrial Average (DJIA) pulled into the middle again on Monday, echoing last Friday’s stubborn midrange pin after investors half-hearted attempts to stage a technical rally in the equity index fizzled near key technical levels. Momentum is set to remain subdued as investors buckle down for the wait to key midweek Consumer Price Index (CPI) inflation figures due on Wednesday.

US Producer Price Index (PPI) business-level inflation figures are on the docket for Tuesday, and markets are hoping for a continued easing in structural inflation pressures. Core PPI for the year ended in July is forecast to ease to 2.7% from the previous 3.0%.

Wednesday’s YoY core CPI inflation is likewise expected to tick down to 3.2% from the previous 3.3%. Markets have trapped themselves in a Goldilocks forecast scenario; if CPI comes in too high, market sentiment will take a hit. On the other hand, if CPI comes in too low, it could spark another fear-fueled pullback, leaving the only topside option available to equities a soft but not too soft inflation print.

Dow Jones news

Two-thirds of the Dow Jones board is in the red on Monday as investors look for a meaningful foothold. Walmart Inc. (WMT) and Unitedhealth Group Inc. (UNH) rose over 1.5% apiece, while losses were led by Procter & Gamble Co. (PG) and Boeing Co. (BA), each of which fell around 2% on the day.

Dow Jones price forecast

The Dow Jones traded on the tepid side on Monday, testing down around one-fifth of one percent as intraday price action struggles to find a grip on the 50-day Exponential Moving Average (EMA) near 39,583.00. The index remains down around 5% from its all-time high of 41,371.38, but bidders stepped in to keep it from falling into the 200-day EMA at 37,962.00.

The index’s nearly 7% top-to-bottom plunge kicked off earlier in the month knocked investors off their balance, but price action has recovered after finding a floor near 38,382.00. Traders should expect a continued topside recovery back over the 50-day EMA to challenge the 40,000.00 major price handle once more, but investors will be waiting for the results from upcoming inflation data prints before stepping fully in.

Dow Jones daily chart