The Dow Jones Industrial Average (US30) index reversed substantial gains after inflation data showed potentially strong resistance.
Inflation in the United States came in lower than expected, and the initial rally cooled.
US30 – Daily Chart
The US dollar’s gains at the end of the day may signal a hawkish Federal Reserve tomorrow when the FOMC meets to discuss interest rates. The Dow Jones has rallied since October but has shown signs of being capped ahead of the 34,000 level. Stocks need to get above 34,275 with the FOMC meeting to continue the recent rally.
US inflation came in at 7.1% for the 12 months to the end of November, dropping from 7.7% in October, according to US Labor Department data.
That was the slowest pace in almost a year and lower than analysts expected. However, the overall picture is still improving, with the cost of some items, such as housing, continuing to climb.
The US central bank has hiked interest rates at the fastest pace in decades this year as it tries to get the inflation problem under control. Earlier this month, Federal Reserve Chairman Jerome Powell said that the bank would slow the pace of its rate hikes to better study how they affect the economy.
The Federal Reserve helped in the fight against inflation with the resolution of many supply chain issues caused by the pandemic, as well as a sharp decline in fuel costs.
The average price for a gallon of gasoline in the US now costs less than it did a year ago, according to the motoring association AAA, which said last week That is partly thanks to a drop in oil prices driven by reduced demand expectations.