- The Dow Jones rose on Thursday, buoyed by a general improvement in equities.
- Investors shrugged off a downside GDP print, focusing on medium-term factors looming ahead.
- US PCE inflation figures due on Friday will be the last data hurdle this week.
The Dow Jones Industrial Average (DJIA) rose to its highest figure in 16 weeks on Thursday, testing above 43,300 for the first time since late February. A general improvement in equity market tides lifted all boats, and investors are keeping an eye on key factors looming over markets in the medium term.
The Trump administration is struggling to muscle its “Big, Beautiful Budget Bill” through the US government. Several hitches and snags have cropped up along the way at both the congressional and Senate levels, and the Trump team is running out of time to get the deficit-swelling budget passed before the July 4 Independence Day holiday.
Budgets, tariffs, inflation
President Trump’s temporary suspension of “reciprocal tariffs” announced in April is set to end on July 9, and the arbitrary deadline is looming ahead with very little clear progress on any major trade deals. Donald Trump’s whipsaw approach to announcing and then canceling or delaying tariffs has sparked a challenging stance in markets, with investors broadly banking on each new iteration of tariff threats from the White House to result in the Trump administration finding a reason to cancel or delay once again. However, the approaching reciprocal tariff deadline could see some market tensions rise as investors brace for the Trump team’s next moves.
White House Press Secretary Karoline Leavitt floated the idea of Trump delaying his reciprocal tariffs again in the run-up to the July 9 deadline. However, further delay discussions without hard action could still see markets grow anxious as the US economy continues to grapple with an uncertain trade policy future.
Inflation metrics will take on an increasingly significant role in the weeks and months ahead as policymakers and market participants alike look for signs of inflationary pressure from President Trump’s tariff policies. US Personal Consumption Expenditure Price Index (PCE) inflation for the month of May will print on Friday. Core annualized PCE inflation is expected to rise to 2.6% YoY, with monthly figures expected to hold steady at 0.1% MoM.
Dow Jones price forecast
The Dow Jones Industrial Average continues its steady climb after catching a technical bounce from the 200-day Exponential Moving Average (EMA) last week, rising nearly 4% from the 41,860 region. The Dow Jones has successfully recovered all of its losses suffered following reciprocal tariff announcements in April, but it is still on the low side of record highs posted above the 45,000 handle.
Dow Jones daily chart
Economic Indicator
Core Personal Consumption Expenditures – Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures.” Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
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