Dow Jones Industrial Average jumps after Fed gives a nod to rate cuts

• The Dow Jones rallied to 41,200.00 after Fed officials agreed its time to cut rates.
• Equities have immediately moved on to guessing how many rate cuts in 2024.
• Rate markets see 100 bps in cuts by 2024 year-end.

The Dow Jones Industrial Average (DJIA) lurched higher on Friday after the Federal Reserve (Fed) gave a nod of the head to upcoming rate cuts. Several Fed policymakers appeared before markets to signal a long-awaited shift in policy stance that markets have been rallying for since at least last December, when investors had initially priced in an eye-watering six rate cuts for over 200 bps by the end of 2024.

Read more: Jerome Powell repeats timing and pace of rate cuts will depend on data

Fast-forward to late August, and traders are now grappling with whether or not the Fed’s September rate call will be for 25 or 50 bps. According to the CME’s FedWatch Tool, rate markets are pricing in roughly three-to-one odds of a double cut on September 18, with the rest of the rate board still committed to a single quarter-point cut. Bets of a 50 bps opening rate trim in September rose after Fed Chairman Jerome Powell, while speaking at the Jackson Hole Economic Symposium on Friday, openly admitted that the time has finally come for the US central bank to begin pushing reference rates down.

Dow Jones news

Despite a broad topside pivot in market sentiment on Friday, roughly a third of the Dow Jones index is still grappling with the low side. Procter & Gamble Co. (PG) tumbled around one percent, falling to $168.41 per share after it was revealed that COO Shailesh Jejurikar sold nearly a third of his stake in the company. On the bullish side of the board, Dow Inc. (DOW) rallied 2% to $53.62.

Dow Jones price forecast

The Dow Jones managed to tap 41,200.00 for the first time since late July amidst a broad rally in equities. With the index continuing to test higher ground, the DJIA is on pace to again challenge all-time highs priced in at 41,371.38 set in mid-July.

Despite a firm bullish stance, bidders are at risk of running out of momentum with price action strung along the high side. The Dow Jones continues to trade well above the 200-day Exponential Moving Average (EMA) at 38,187.93, and a near-term pullback will see the Dow Jones skid back into the 50-day EMA rising into the 40,000.00 major price handle.

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Dow Jones daily chart