Dow Jones Industrial Average grinds higher as equity melt-up continues

• The Dow Jones pushed closer to 43,000 as investors await a resolution to US-China trade tensions.
• Key US inflation data due this week, beginning with US CPI inflation figures on Wednesday.
• Inflation expectations have tempered recently, but market forecasters are still bracing for tariff impacts.

The Dow Jones Industrial Average (DJIA) rose on Monday, testing above 42,800 as ongoing trade talks between the Trump team and Chinese representatives are ongoing in London. Equity markets are 'melting up' as investors await signs that Trump and China's Xi Jinping will find a workaround to accelerationist trade war rhetoric that has gripped markets in a sentiment tug of war ever since the Trump administration announced a widespread package of "reciprocal tariffs" in early April.

According to reporting, President Donald Trump gave his negotiation team in London permission to explore lifting trade restrictions on tech exports to China as a potential bargaining chip. Whether or not the move will have a material impact on trade talks with China remains to be seen. Trump's newest tech export restrictions on China, intended to curb Chinese access to technology necessary for building AI modeling machines, were introduced after the two countries had already begun trade talks.

Inflation data looms large in the week ahead

May's Consumer Price Index (CPI) inflation figures, due on Wednesday, will kick off a raft of price volatility measures being released this week. Near-term CPI inflation is expected to tick higher as whiplash tariff policies that were announced, canceled, reinstated, and changed at the beginning of the second quarter are expected to begin having an increasing impact on inflation data in the coming months. Core annualized CPI inflation is expected to tick up to 2.9% YoY from 2.8%, well above the upper band of the Federal Reserve's (Fed) 2% annual target.

The New York Fed's latest survey of consumer expectations showed that consumer inflation fears are beginning to temper: the latest survey data showed the median consumer expected 1-year inflation to land somewhere near 3.2%, versus the previous 3.63%. However, the University of Michigan's (UoM) Consumer Inflation Expectations survey results, slated to be released this Friday, will serve as the key sentiment print this week.

Dow Jones price forecast

The Dow Jones Industrial Average (DJIA) continues to push into the top end of recent consolidation, inching toward a near-term technical ceiling at the 43,000 major price handle. Price action remains on the high side of the 200-day Exponential Moving Average (EMA) near 41,650. Bullish momentum could see a pause for breathing room as technical oscillators tilt into overbought territory.

Dow Jones daily chart