DJIA – PCE Inflation Will Decide Whether Dow Jones Record Run Extends
US stock markets finished the week strongly, with a record close for the Dow Jones and renewed investor appetite for small caps after Jerome
Quick overview
- US stock markets ended the week on a high note, with the Dow Jones reaching a record close of 45,631 points.
- Federal Reserve Chair Jerome Powell's dovish remarks fueled optimism, leading to increased expectations for rate cuts in 2025.
- The Russell 2000 index saw a significant jump of 3.86%, indicating renewed investor interest in small-cap stocks.
- Upcoming economic reports, particularly the PCE inflation data, will be crucial in shaping future market expectations.
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US stock markets finished the week strongly, with a record close for the Dow Jones and renewed investor appetite for small caps after Jerome Powell signaled a more dovish policy path, while this week PCE inflation will be the highlight.
Powell’s Speech Lifts Sentiment
Federal Reserve Chair Jerome Powell’s latest remarks suggested flexibility on interest rates, reinforcing expectations of two rate cuts in 2025, with the first widely anticipated in September. Market odds for these cuts surged to nearly 100% after the speech, sparking optimism across equities. The Russell 2000 stood out, jumping 3.86% for its strongest weekly performance since April 9, a clear sign of renewed interest in riskier assets.
Dow Hits Record Highs
The Dow Jones Industrial Average advanced nearly 1.5% over the week, closing at a record 45,631 points after reaching an intraday peak of 45,741. This move decisively broke through resistance levels near 45,000 that had been intact since November 2024. The rally, led by blue chips and large caps, reflects growing confidence in established industry leaders, underscoring the strength of investor conviction.
Dow Jones Chart Daily – MAs Will Continue to Act as Support
Tech Lags, Market Breadth Expands
Despite the broad rally, technology stocks remained under pressure, keeping the NASDAQ in negative territory for the week. By contrast, the Russell 2000’s outperformance signals widening participation in the rally, with smaller companies finally catching up after lagging earlier in the year. This expansion beyond mega-cap tech suggests a healthier balance in market leadership.
Key Data Ahead
Markets now turn their focus to upcoming economic reports. The preliminary US GDP figures on Thursday and the PCE inflation release on Friday will shape expectations for the Fed’s policy outlook. A softer PCE reading—forecast at a 0.3% monthly increase—would bolster the case for rate cuts, while a stronger figure could temper optimism and weigh on equities.
Conclusion: The strong finish to the week, driven by Powell’s dovish tone and broad-based equity gains, has set the stage for further market strength. With the Dow at record highs and small caps surging, momentum appears to be building. However, caution remains ahead of key inflation data, which could either reinforce or challenge the Fed’s expected path toward rate cuts.
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