Dow Jones hits record high post Fed decision

Federal Reserve keeps interest rates unchanged

By Raed Alkhedr | @raedalkhedr | 14 December 2023

Dow Jones 14-12-2023
  • U.S. stocks rise post-Fed rate decision

  • Fed holds rates at 22-year high

  • U.S. Producer Price Index falls short of expectations

The U.S. stock market witnessed a significant upswing in its latest session, with the Dow Jones Industrial Average soaring to new heights, spurred by the Federal Reserve's latest policy decisions and remarks from Chair Jerome Powell. This rally marked a notable milestone, as the Dow Jones closed at a record high.

Central to these market movements was the Federal Reserve's announcement on Wednesday to keep interest rates steady, holding them between 5.25% and 5.50%. This decision marks the highest interest rate level in over two decades, a clear indication of the Fed's ongoing battle against inflation.

In a positive turn, the Federal Reserve revised its inflation forecast downwards, now expecting a rate of 2.8% for the current year, a decrease from the previous 3.3% projection. Similarly, expectations for next year's inflation have been adjusted from 2.5% to 2.4%.

During the post-decision press conference, Federal Reserve Chair Jerome Powell acknowledged a decrease in inflation rates, though he emphasized that they remain uncomfortably high. Powell highlighted that this reduction has not led to a significant rise in unemployment, a balancing act in the current economic scenario.

Further influencing the market was the release of data from the U.S. Bureau of Statistics, which showed a downturn in the Producer Price Index (PPI) for November. Year-on-year, the PPI fell to 0.9%, down from October's 1.2%. Excluding food and energy, the annual increase slowed to 2%, a decrease from the previous 2.4%. On a monthly scale, the PPI held steady, showing no change.

Market attention now turns towards upcoming economic indicators, including retail sales and unemployment claims data within the U.S. Additionally, decisions on interest rates from various global central banks are eagerly awaited.

Futures trading for the Dow Jones indicated a robust start to the day, with the index hovering near the 37,200 mark, signaling continued investor optimism.

Dow Jones technical analysis

Technical analysis of the Dow Jones reveals a significant breakthrough, as the index surpassed the 37,000-point resistance level, climbing to a historic peak around 37,250 points. Should this upward trajectory persist, the index could reach and potentially exceed the 37,500-point mark, paving the way to challenge the 38,000-point threshold.

However, in the event of a market pullback, the Dow Jones might find support around the 37,000-point level. This level is crucial for maintaining the index's upward momentum. A dip below this threshold could trigger a decline towards the 36,000-point mark, a scenario that traders and investors will watch closely.

Dow Jones TA 14-12-2023