Dow Jones @ 36000 …
American market on Friday closed at 35970 near to 36000 level. Dow Jones closed in the green this week after four weeks of losses. Last week on Friday American CPI numbers came at 6.49 % which is at its high level in last four decades but however markets has already discounted this expectation and have closed in positive territory. In the next week there is a key event planned by Federal Reserve regarding decision on interest rates and also it needs to observe the pace of tapering of bond buying program which was started to support the economic growth which was comes to halt due to pandemic.
- American CPI at four decades’ high
- Dow Jones at 36000 and closed in the green on weekly basis
- Jobless claims lowest since 1969
- Observe on Federal Reserve Meeting on Wednesday for decision on bon buying program
The recent steep rise in Consumer Price numbers are due to many of the factors and most importantly from supply side. Americans are feeling the pinch of rise in cost of goods, energy, housing and other items. If we see recently all the raw material prices right from steel, aluminum, cement have risen significantly and this has resulted in rise in cost of goods, services.
Regarding stock market, then it must be aware that market has accumulated all this news and have closed at high in an anticipation that the coming festive season will be good in sales.
Furthermore, recent rally has got support from jobless claims numbers which have, tumbled to 43,000 in the week through Dec. 4 to a seasonally adjusted 184,000. This is the lowest figure since 1969. And on the other side there were 400,000 new job openings in October which has made to a total just over to 11 million, close to new high level. The number of jobless claims are now 18% below pre-covid levels. This has added a positive sentiment and generated a momentum in the market.
On the contrary, chip shortage across the globe is hunting the automotive industry and many of the global OEMs are feeling the pinch of it. Chip shortage has resulted in the lowering the production volumes by many of the car companies. But on the positive front majority of the Car OEMs have raised their prices to take advantage of demand supply side.
Stock Markets Perspective
Big names of the markets like Apple, Tesla have given more than 10% return last week compared to other stocks from small cap segment. Stock market rally has showed significant strength by closing at its weekly high after testing recent low of 34424 however Russell 2000 has advanced marginally by 2.4%
Dow Jones has closed at 35970 which is well above of 200 DMA value of 34500. As per the charts it seems that Dow Jones may test its all-time high value of 36,432 and may enter into unchartered territory if no any negative news comes into picture specially from Omicron side as of now it is not a big potential threat to the markets and economy.
However, the recent rally needs to give a confirmation before we conclude start of new uptrend in the market. It’s possible that next week’s Federal reserve’s meeting could set the trend but decisive move could come before the meeting.
Things to watch out for
Dow Jones 200 DMA
Please be informed that confirmed market rallies not necessary to always work.
rallies not necessary to always work.