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Dow Jones Industrial Average climbs to new record high

Posted on by Vaseline
Dow Jones Industrial Average climbs to new record high

  • The Dow Jones broke through 42,000 on Thursday, reaching a record high for the third time in a row.
  • Stocks are firmly optimistic after the Fed’s long-awaited rate cut this week.
  • The Fed’s massive 50 basis point hike on Wednesday cleared the way for further rate cuts this year.

The Dow Jones Industrial Average (DJIA) broke through the psychological level of 42,000 on Thursday as stocks rose in a broad market rally after the Federal Reserve (Fed) finally delivered its first rate cut in more than four years. Stocks have gone full risk-on, with the Dow Jones on track to close nearly 600 points into record territory.

On the data side, initial US jobless claims fell back to 219,000 for the week ended September 13, down from a revised 231,000 the previous week and below the median market forecast of 230,000. The Philadelphia Fed Manufacturing Survey for September also came in well above expectations, with the manufacturing conditions spread index improving to 1.7 from the previous seven-month low of -7.0, comfortably beating the expected print of -1.0.

Fed Chairman Jerome Powell convinced markets that this week’s jumbo 50-bps cut wasn’t a knee-jerk reaction to deteriorating economic conditions, but rather an attempt to get ahead of the curve and shore up the U.S. labor market. Powell successfully rebranded the full half-percentage-point cut as a “recalibration,” and investors rewarded the Fed’s latest narrative shift by pouring money into equities.

Dow Jones News

Despite some stocks remaining stubbornly in the red, most of the Dow Jones Industrial Average is deep in the green on Thursday. Salesforce ( CRM ) and Caterpillar ( CAT ) are up more than 5% from the morning open, trading at $266 and $373 per share, respectively. Salesforce is rising despite an announcement that Disney ( DIS ) would stop using Salesforce-owned Slack as the company’s communications product after a security breach allowed a hacking entity to intercept and leak a terabyte of company information.

Dow Jones Price Prediction

With the Dow Jones hitting its all-time high of around 600 points on Thursday, the major stock index is on track for another record close as price action tops 42,000. The Dow Jones’ stellar performance in 2024 continues unabated, with the stock chart set to close in the green for the fifth straight month.

Buyer exhaustion continues to threaten intraday positions built up after the midweek pullback to 41,500. However, any real threat would first require enough short pressure to be baked into the chart, a tough proposition with current prices facing no technical resistance and the Dow trading a whopping 8% above its long-term 200-day exponential moving average (EMA) at 38,656.

Dow Jones Daily Chart

Frequently Asked Questions about Dow Jones

The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is composed of the 30 most traded stocks in the United States. The index is price-weighted rather than capitalization-weighted. It is calculated by adding the prices of its constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years, it has been criticized for not being sufficiently representative, as it tracks only 30 conglomerates, unlike broader indices such as the S&P 500.

Many different factors drive the Dow Jones Industrial Average (DJIA). The overall performance of its component companies, as revealed in quarterly earnings reports, is the most important. U.S. and global macroeconomic data also contribute, as they influence investor sentiment. The level of interest rates set by the Federal Reserve (Fed) also affects the DJIA, as it affects the cost of credit, which many companies rely heavily on. Therefore, inflation can be a major driver, as can other metrics that influence the Fed’s decisions.

Dow Theory is a method for identifying the primary trend of the stock market, developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criterion. The theory uses elements of peak and trough analysis. Dow’s theory assumes three trend phases: accumulation, when smart money starts buying or selling; public participation, when the general public joins in; and distribution, when the smart money leaves.

There are several ways to trade the DJIA. One is through the use of ETFs, which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 participating companies. A good example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts allow traders to speculate on the future value of the index, while options offer the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds allow investors to buy a share of a diversified portfolio of DJIA stocks, thereby gaining exposure to the overall index.

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