The Dow Jones Industrial Average closed at 36,577.94 on Tuesday, December 12. That represented the third-highest close in the history of the index. This index has now increased 10.4% so far in 2023.
Investors sentiment enjoyed an uptick after the most recent report on U.S. inflation. That report revealed that inflation in the United States, as measured by the Consumer Price Index (CPI), declined to 3.1% Meanwhile, the annual core inflation, which excludes food and energy prices, held steady at 4%. Monthly, CPI rose 0.1% and 0.3%, respectively.
According to the report, US CPI inflation could continue to impact the US Dollar’s valuation. Moreover, inflation is now drawing closer to the target that central banks set out back in 2022. That means that we are still on track for a potential policy change as far as interest rates are concerned in 2024.
A future softening of interest rates would be good for the Dow and the broader market. Indeed, higher interest rates have negatively impacted business investment, dealt a blow to equities outside of the “Magnificent 7”, and put the North American real estate market in a bind. However, investors should not expect a downward move before we move into the New Year.
The Fed is set to hold its final meeting of 2023 this Wednesday and Thursday. It is expected to hold interest rates steady after the meeting is concluded. That said, investors should pay close attention to the comments
