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Dow Jones Extends Winning Streak Amid Key Earnings Reports and Federal Reserve Policy Decision


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

The Dow Jones Industrial Average continued its impressive winning streak, marking the longest rally since February 2017, with an 11th consecutive day of gains. The 30-stock Dow rose 0.52%, reaching 35,411.24 points, supported by a 0.40% rise in the S&P 500 and a 0.19% gain in the Nasdaq Composite. Energy stocks led the upward trend, particularly with a 1.7% surge in the S&P 500’s energy sector following positive oil and gasoline futures. Notably, Chevron’s nearly 2% increase came after the company reported better-than-expected preliminary second-quarter earnings. However, market participants remain cautious as the upcoming week includes significant earnings reports from approximately 150 S&P 500 companies and the Federal Reserve’s policy decision. Traders are eager to gauge Chair Jerome Powell’s remarks to understand the central bank’s approach to the economy’s soft landing and the potential quarter-percentage-point rate increase anticipated at the meeting’s conclusion on Wednesday.

Investors are closely monitoring the potential impact of the earnings reports and the Fed’s policy decision on the recent bullish run. The upcoming week is marked by substantial earnings releases from major companies, including Alphabet, Microsoft, and Meta, as well as industrial firms and big oil. Furthermore, traders are eagerly awaiting the release of the personal consumption expenditures index, the Fed’s preferred inflation gauge, at the end of the week. As these critical events unfold, Wall Street remains on the lookout for any signs of market volatility and potential shifts in economic sentiment.

Data by Bloomberg

On Monday, the overall market showed positive performance, with all sectors gaining 0.40%. The energy sector led the way with a notable increase of 1.66%, followed closely by financials and real estate, which rose by 1.01% and 1.00%, respectively. Consumer discretionary stocks also performed well, posting a gain of 0.52%. Communication services and consumer staples sectors saw modest growth with increases of 0.46% and 0.38%, respectively. Materials and information technology sectors showed moderate gains of 0.31% and 0.26%. However, the health care sector experienced a slight decline of 0.23%, while utilities had a marginal decrease of 0.28% on Monday.

Major Pair Movement

The dollar index strengthened by 0.26% as both the euro and sterling faced losses due to disappointing flash euro zone and UK PMI data. This rise in the dollar index was partially offset by a 0.25% drop in USD/JPY, which followed steady Japan PMI figures. Market participants were closely monitoring the upcoming meetings of major central banks, including the Federal Reserve, the European Central Bank (ECB), and the Bank of Japan (BoJ), all scheduled later in the week.

The dollar’s resilience was supported by a rebound in Treasury yields, which had initially fallen in response to lower European yields and mixed U.S. PMI data. However, the retreat in yields was short-lived, bolstered by increased corporate supply and expectations surrounding this week’s 2, 5, and 7-year Treasury auctions. The future direction of Treasury yields and the dollar hinges largely on the statements issued by the Federal Reserve after the expected 25 basis point rate hike on Wednesday. Market sentiment remains uncertain, given broader indications of a cooling U.S. economy and lower inflation, which may potentially favor rate cuts in the coming year.

During this period of central bank activity, investors were also closely monitoring the impact of Russian attacks on Ukraine ports, which contributed to a surge in wheat prices, and the ongoing recovery in fuel prices. Additionally, traders kept a keen eye on other crucial economic indicators such as German Ifo data and U.S. consumer confidence. The ECB is expected to implement a 25 basis point rate hike on Wednesday, with further increases largely priced in by year-end. Consequently, the euro experienced a decline of 0.49%, while sterling also faced a 0.23% drop, as the Bank of England (BoE) is likely to pursue a 25 basis point rate hike in August, followed by additional hikes to tackle higher inflation in the UK. USD/JPY experienced fluctuations in line with Treasury yields, fueled by lingering hopes that the BoJ would raise its JGB yield cap on Friday. Moreover, Japanese government efforts to limit yen depreciation, which contribute to cost-push inflation rather than demand-pull inflation, also influenced the currency pair’s movements.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDCB Consumer Confidence22:00112.1

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