Dow Jones index gave its highest weekly close in history last week as it closed at 37,305 points. On Monday, US blue chips extended their gains, which resulted in a minor gain of 13 points in Dow Jones Industrial Average till press time.
As a result, the index stood at 37,322 points during the final hours of trading. The tech sector led the gains as industry heavyweights like AMZN, META, NVDA and NFLX posted major gains on the opening day of the week. The outlook is looking very positive amid favorable macroeconomic conditions.
The cooling down bond yields and tanking dollar index are fuelling the ongoing bull run in the US equities. In addition, Goldman Sachs analysts expect the US economy to perform better than expected in 2024. This market sentiment points toward a potential soft landing by evading a previously feared recession.
In its last FOMC meeting of 2023, the US Federal Reserve once again decided not to raise interest rates any further. This decision was made in light of recent inflation and economic data and caused a strong rally in the Dow Jones Index.
Additionally, analysts are now expecting rate cuts sooner than previously expected. The CME Fed Watch Tool is depicting an 8.3% probability of a 25 bps rate cut in the next FOMC meeting which will be held on 31st January 2024.
The black lines on the following chart show support levels, while the blue line shows the current resistance and the previous all-time high of the index. If it finds strength above 37,000 points level, the Dow Jones Index forecast will become even more bullish.
However, rejection and then acceptance below the 37,000 points level may cause a bullish reversal. Therefore, it is better to wait for this level to turn into support.