- Summary:
- Fed Chairman Jerome Powell's comments on Monday have rocked the market. But the market doesn't seem too sour to rise further.
The Dow Jones Index was flat on Monday as traders tamed their appetite following comments by the Federal Reserve Chairman, Jerome Powell. The Index ended the trade at +17 points, after Powell stated that the Fed was not in a hurry to slash interest rates. That was interpreted as hawkish, putting pressure on stocks in view of recent soft US economic data.
While the Fed’s deep interest rate cut in mid-September was welcomed by the markets, FOMC members are cautious about the inflation trajectory. The annualised inflation rate stood at 2.7 percent in August, as per the PCE data released last Friday. That was still above the Fed’s target 2 percent rate, lending credence to Powell’s comments on Monday.
Powell’s comments might have triggered a contagion effect, with the top ten Dow Jones Index (INDEXDJX: .DJI) stocks trading in the negative territory in Tuesday’s pre-market session. Two FOMC members, Tom Barkin and Raphael Bostic are scheduled to speak later in the day, and their comments could shape the market’s alignment in relation to interest rate trajectory.
Looking ahead, US ISM manufacturing PMI figures will be out later on Monday, and could inject fresh volatility into the market. In addition, the JOLTs Jobs Openings data will provide perspective into the US jobs market, and will also impact the market sentiment. The Fed is keen on maintaining a balance between rising unemployment and inflation rate, and the jobs figures could have a bearing on potential additional cuts.
Dow Jones Index today
The Dow Jones Index pivots at 41,148, and the upside will likely prevail if the action stays above that level. The first barrier could come at 42,395, but a stronger bullishness in the market could break above that level to hit a new record high of 42,548.
Conversely, a move below 42,148 will signal bearish control in the market. In that case, the nearest support will likely be at 41,961. If the downward momentum strengthens, the support could be breached and the index could move lower to settle around 41,779.
