Dow Jones Index Analysis

The Dow Jones from an Economic Perspective

U.S. stocks rose today after Wednesday’s declines, as the Federal Reserve raised its benchmark interest rate for the first time in more than three years in an effort to curb high and persistent inflation caused by rising crude oil prices during the U.S. war on Iran.

In the statement accompanying the decision, the Federal Reserve noted that the decision was unanimous and that further monetary tightening is likely in the near future to bring about a faster decline in inflation rates.

Federal Reserve Governor Kevin Warsh said that the U.S. economy has improved since the Board’s last meeting, but the trend in inflation has shown only a slight improvement.

However, U.S. indices—particularly the Dow Jones—rebounded after the market priced in the rate hike decision, as the move had already been anticipated.

The Dow Jones from a Technical Perspective

The Dow rose today to near the 51,900-point level, after hitting a more than three-month low yesterday near 51,160 points.

We expect the Dow to decline again from current levels or if it approaches the downtrend levels at 52,050/150 points. The initial target is 51,600, followed by 51,000 as a secondary target.

This scenario would be invalidated if the index breaks above 52,300.