{"id":58040,"date":"2025-01-20T08:10:46","date_gmt":"2025-01-20T07:10:46","guid":{"rendered":"https:\/\/www.captrader.com\/?post_type=analyse&p=58040"},"modified":"2025-01-20T08:10:47","modified_gmt":"2025-01-20T07:10:47","slug":"dow-jones-forecast-analysis-the-bulls-are-back","status":"publish","type":"analyse","link":"https:\/\/www.captrader.com\/en\/analyse\/dow-jones-prognose-analyse-die-bullen-sind-zurueck\/","title":{"rendered":"Dow Jones Forecast & Analysis: The bulls are back"},"content":{"rendered":"
After a very strong year overall in 2024, the Dow Jones has taken a breather since the beginning of December and retreated by around 7%. The correction received a tailwind from renewed concerns about a rise in inflation and a suspension or slower pace of interest rate cuts by the Fed. In the past trading week, however, the bulls made a remarkable comeback and the chances of a continuation of the long-term upward trend have now increased significantly.<\/p>\n\n\n\n
Producer and consumer prices provide relief<\/strong><\/h2>\n\n\n\n
After the Fed's projection for 2025 in December assumed an increase in inflation and only one or two interest rate hikes by the end of the year, causing noticeable uncertainty, Wall Street has focused its attention on economic, labour market and inflation data in recent weeks. Strong economic and labor market data increased fears of inflation. Yields on ten- and thirty-year US government bonds rose significantly, which also weighed on the stock markets.<\/p>\n\n\n\n
Two other important dates were on the agenda last week: the producer price index was published on Tuesday and the consumer price index on Wednesday. Both are important inflation indicators. Producer prices were cooler than analysts had expected, both on a monthly and year-on-year basis. Consumer prices were in line with expectations, but the core rate also remained below forecasts. <\/p>\n\n\n\n
The subsequent relief was great: the yield on ten-year US government bonds fell from 4.82% to 4.63% on Friday evening. On the stock market, all major indices rose significantly. With a weekly gain of 3.69%, the Dow Jones outperformed the S&P 500 (+2.91 %) and the Nasdaq 100 (+2.85 %).<\/p>\n\n\n\n
The long-term upward trend in the Dow Jones Industrial Average has been in a clean trend channel since the end of 2023. As you can see on the following weekly chart, the most recent correction ended exactly at the trend line. With the third point of contact, this trend line can therefore be regarded as confirmed. The price target for the coming weeks or months would therefore be the upper trend channel boundary line. <\/p>\n\n\n\nDow Jones weekly chart<\/figcaption><\/figure>\n\n\n\n
Another positive signal emerged from a candlestick analysis perspective. Last week's upward movement represents a bullish engulfing pattern, i.e. the weekly candle encloses the entire body of the previous weekly candle. Another positive aspect is that this reversal signal took place under increased volume. The weekly EMA 20 (purple) was also reclaimed.<\/p>\n\n\n\n
Banks provide positive impetus<\/strong><\/h2>\n\n\n\n
Last week saw the start of the reporting season for the fourth quarter of 2024 in the US, with the focus traditionally on the financial sector. Major banks such as Goldman Sachs, J.P. Morgan, Citigroup and Wells Fargo presented their business figures and exceeded investors' expectations. Wells Fargo surprised with optimistic forecasts for the current year and saw its share price rise by 5.2 percent. JPMorgan achieved a record profit, while Citigroup shares rose by more than 6 per cent, partly due to an announced share buyback program worth 20 billion dollars. Goldman Sachs benefited from a strong rise in profits and led the Dow Jones with a gain of 5.9 percent.<\/p>\n\n\n\n
On a weekly basis, the Goldman Sachs share was the strongest stock in the Dow Jones with a rise of 11.78%. The following daily chart shows that the share rose to a new all-time high amid high volumes, thus generating a bullish signal.<\/p>\n\n\n\nGoldman Sachs Share Daily Chart<\/figcaption><\/figure>\n\n\n\n
J.P. Morgan was the third strongest stock in the Dow Jones, with an increase of 8.04 % compared to the previous week. Similar to Goldman Sachs, J.P. Morgan shares rose to a new all-time high amid high volumes.<\/p>\n\n\n\nJ.P. Morgan Chase Share Daily Chart<\/figcaption><\/figure>\n\n\n\n
Focus on reporting season and Donald Trump's inauguration<\/strong><\/h2>\n\n\n\n
The continuation of the reporting season could provide further important impetus for the stock markets in the coming weeks. The question of how the strong US dollar will affect companies' results remains particularly exciting. A strong dollar can weigh on the profits of companies that generate a large proportion of their sales abroad, as their products and services become more expensive for customers outside the USA. This particularly affects export-oriented sectors such as technology, consumer goods, mechanical engineering and the pharmaceutical industry.<\/p>\n\n\n\n
Another important event that investors should pay attention to this week is the inauguration of Donald Trump and the new US administration. The focus will be on issues such as trade tariffs and economic policy, which could also have implications for the equity markets.<\/p>\n\n\n\n
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