Dow Jones Industrial Average grapples with Fed rate cut hopes and cautious Fedspeak

• Dow Jones softly higher on Tuesday but risk appetite remains tepid.
• Fed officials throw caution about broad-market rate cut hopes.
• Rate markets still see nearly 70% odds of a September rate trim.

The Dow Jones Industrial Average (DJIA) finds thin gains on Tuesday, climbing around a tenth of a percent halfway through the American market session. Still, broad-market risk appetite is being threatened by cautionary statements from Federal Reserve (Fed) officials highlighting the Fed's lack of capacity to slash rates if inflation pressures and labor market tightness don't show firmer signs of slackening.

Fed's Kashkari: Rate hikes unlikely, but not entirely off the table

The Dow Jones gained a slim margin in early Tuesday trading, climbing a tenth of a percent but getting hung up on statements from Minneapolis Fed President Neel Kashkari, who noted that progress on bringing down inflation looks to have stalled. Kashkari also noted that the Fed will need to see progress on inflation and easing pressure in the US' tight labor market before rate cuts can be fully considered, noting that the Fed is increasingly likely to hold rates where they are for much longer than the public expects.

According to the CME's FedWatch Tool, rate markets still expect the Fed to deliver a first quarter-point rate cut at the September meeting. Rate traders see 67% odds of a September 25-basis-point cut, with over 90% odds that the Fed will deliver a second cut before the end of 2024.

Dow Jones news

Despite hawkish warning shots from Fed officials, most of the Dow Jones equities were in the green on Tuesday. Caterpillar Inc. (CAD) rose around 1.7% to trade near $348 per share, while Visa Inc. (V) gained 1.35%, rising 3.7 points to $276.32 per share.

On the downside, Walt Disney Co. (DIS) tumbled over -10% on the day, falling 112 points and declining to 104.80 per share after Disney reported a wide downside miss in membership growth in their subscription streaming offerings. Boeing Co. (BA) also lost -0.85%, shedding a point and a half to trade below $177 per share as the battered airline struggles under the weight of safety failures, shipping delays, and legal troubles.

Dow Jones technical outlook

The Dow Jones clipped into an intraday high near 38,980.00 on Tuesday before slipping back to flounder at the 38,900.00 handle. The major equity index is still trading into the bullish side, but struggling to make decisive gains above the day's opening bids near 38,880.00.

The Dow Jones is trading well into bullish territory on daily candles, holding above long-term technical support from the 200-day Exponential Moving Average (EMA) near 36,842.67. The DJIA is on pace to close in the green for a fourth consecutive trading day, and remains well-bid above the last swing low into 37,600.00.

Dow Jones five-minute chart

Dow Jones daily chart