Dow Jones Index Extends Record Highs Whats at Play? Hope Or Confidence?

Summary:
• The US economy printed strong retail sales data for September, allaying fears of potential downturn. But the Dow Jones Index has more going.

The Dow Jones Index (INDEXDJX: .DJI) rose to new all-time highs of 43,289 points on Thursday as upbeat sentiment returned to the market following forecast-beating Retail Sales data. The Index took a beating on Tuesday after Dutch semiconductor company ASML Holdings released weak quarterly earnings figures and a gloomy outlook for 2025. That triggered concerns that a contagion effect could spread to the wider market, considering the semiconductor market’s central role in stock market gains this year.

However, markets woke up to record-beating earnings by the world’s largest contract semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC). The company reported 54 percent jump in its year-on-year profit to $10.1 billion for the quarter ending September, with its EPS beating analysts’ estimates by $0.15. In addition, the company gave strong guidance for 2025, revising upwards its projection. The news absorbed the shockwaves caused by ASML’s downcast earnings release.

The bigger impact, however, came from Thursday’s strong US Retail Sales data for September. According to the data, retail consumption grew by 0.4 percent, from August’s 0.1 and above the median analysts’ forecast figure of 0.3 percent. In addition, Core Retail Sales (excluding automobiles) grew by 0.5 percent, significantly above the forecast rate of 0.1 percent.

Meanwhile, the previous month’s growth rate was revised to 0.2 percent from 0.1 percent. The strong retail sales data is a positive outlook on the US economy, and provides tailwinds to the Dow Jones Index. UnitedHealth (-0.8 percent), Home Depot (-0.5 percent) and IBM (-0.3 percent) were the only stocks among the top 20 heaviest Dow Jones stocks trading in the negative territory at the time of writing.

Dow Jones Index forecast

The Dow Jones Index pivots at 43,210 points, and the upside will prevail if stocks keep it above that mark. The first barrier will likely be at 43,358, but extended bullishness could break above that level to test 43,495.

On the downside, moving below 43,210 will signal a takeover by the sellers. In that case, initial support will likely be at 43,072. However, if the sellers extend their control, it could break below that level to test 43,963.