Market Analysis – Dow Jones

The Dow Jones is currently trading above its opening price but has come under pressure as we approach the US market open. The index has risen over 4.00% in May, making it one of its best-performing months recently. This growth has been driven by positive earnings data, a slight reduction in inflation, and weaker employment data.

On larger timeframes, the USA30 shows bullish indications but remains the only index not to reach a new all-time high. The price is above most Moving Averages and the Neutral level on Oscillators, suggesting bullish momentum. However, it is currently trading below the VWAP and forming a descending triangle pattern on the 5-minute chart. Additionally, investors are cautious as the DAX, Euro Stoxx 50, and CAC 40 are trading lower today. Buy signals are likely to emerge once the index surpasses the following resistance level:

• $39,913.83
• $39,962.03
• $39,997.65

Nonetheless, the scenario in terms of the Federal Reserve’s monetary policy is little changed. Currently, the CME FedWatch Tool predicts a 51% possibility of a cut in September, very similar to April’s expectations, but the US Bond Yields have fallen indicating a lower rate hike. What has changed for US inflation?

The US CPI dropped from 0.4% to 0.3%, contrary to expectations of remaining unchanged, and the annual rate declined from 3.5% to 3.4%. Meanwhile, the core CPI fell from 3.8% to 3.6%. Real estate and energy costs saw the highest increases during the reporting month. Overall, inflationary pressure in the American economy has lessened somewhat, but the rate of consumer price growth remains well above the Federal Reserve’s 2% target.

Positive earnings continue to support the index. This morning, Walmart stocks surged 5.88% after reporting higher earnings and revenue. Walmart currently holds a 0.99% weight in the Dow Jones. From the 30 components, 47% are trading lower while 53% are higher.