Dow Jones Index: US Retail Sales Set to Spur Volatility…

Support 1: 42358.67, a 4-hour chart swing low and range resistance level

Support 2: 41852.56, a 4-hour chart swing low and range support level

Support 3: 40266.55, a daily chart swing low

Key Resistance Levels

Resistance 1: 43105.87, a daily chart swing high

Resistance 2: 43162.50, a 4-hour chart swing high

Dow Jones Index Fundamental Analysis

The Dow Jones Index has made record highs as markets cheer the start of the Fed’s easing cycle. Notably, the US Central Bank cut interest rates by 50-bps in September, boosting prices. Furthermore, policymakers maintained a dovish tone, indicating confidence that inflation will reach the 2% target.

However, sentiment shifted with incoming data. The US economy has remained resilient. Ideally, a healthy economy is bullish for stocks. However, when it slows the Fed’s easing cycle, borrowing costs drop at a slower rate. Therefore, relief for businesses is delayed.

Market participants await the US retail sales report for further insight into the Fed’s policy outlook. Economists expect sales to increase by 0.3% in September after a 0.1% increase in the previous month. Meanwhile, they expect core retail sales to hold steady at 0.1%.

An unexpected jump in sales will indicate robust consumer spending. However, it will increase the likelihood of a Fed pause at the November meeting. Futures markets show a 95% chance of a 25-bps rate cut. This value would drop, leading to a decline in the Dow Jones Index.

On the other hand, a downbeat report would boost November Fed rate cut expectations and likely cause a price rally.

Final Thoughts

The Dow Jones Index is on a solid rally and has reached all-time highs. However, technical charts show weakness in the uptrend. The retail sales report might boost bullish momentum to continue the uptrend. However, if it increases the likelihood of a Fed pause, it could be the catalyst that reverses the trend in the smaller time frames.

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