Dow Jones Gains As Fed's Inflation Gauge Drops By One Point

Summary:

The Dow Jones is trading higher as the Core PCE Price Index drops from 0.2% in January to 0.1% in February, staving off inflation fears.

The Dow Jones Industrial Average is trading higher for the 2nd day in a row, buoyed by a fall in the Fed’s key measure of inflation.

Data released on Friday showed that Core Personal Consumption Expenditures Price Index for February gained 0.1%, which was lower than the 0.2% gain in January. The annualized figure also fell from 1.5% to 1.4%, showing that inflationary pressure relative to the Fed’s 2% target remains subdued. Personal Incomes and Consumer Spending also dropped.

The Fear and Greed Index shows that the market is now in a neutral phase where there is neither fear nor greed. At 46.0, the index has ticked lower from a week ago, when the reading was at 53.0. This shows a market that is gradually tilting to where institutional investors typically start accumulating.

The Dow is trading 0.56% on the day and looks set to post a marginally higher weekly close if things continue as they are doing.

Technical Outlook for Dow Jones

Today’s follow-up bounce after yesterday’s closing violation of the 32666 resistance (15 March low) could end up confirming a breakout if the candle maintains a higher close. This scenario would open the door for the Dow Jones to attempt breaking the present all-time high at 33252. If this level is uncapped, we could see new highs that aim for the 34,000 psychological resistance, and the 127.2% Fibonacci extension of the 12 May 2020-2 September 2020 price swing at 34216.

On the flip side, bears would be hoping for a breakdown of the 32084 support, which brings in 31739 and 31282 as potential downside targets. This move would have to come off a rejection at 33252, followed by a breakdown of 32666.