Dow Jones Industrial Average eases back from record highs

• The Dow Jones backslid on Monday from all-time peak last Friday.
• Investor sentiment remains high, but market has trimmed a little off the top.
• A quiet start to the week gives way to the latest batch of US inflation data.

The Dow Jones Industrial Average (DJIA) saw a slight decline on Monday, with the major equity index easing back from record highs posted last week. Market exuberance at what investors are broadly interpreting as a dovish appearance from Federal Reserve (Fed) Chair Jerome Powell has given way to a sedate start to the week as investors brace for the latest round of key US inflation data.

Jerome Powell's appearance at the Jackson Hole Economic Symposium sent global markets scrambling to ramp up bets of an interest rate cut on September 17. According to market participants, Fed Chair Powell gave a far more dovish speech than many had expected. To the Fed head's credit, despite the special occasion calling for some extra verbiage, very little of Powell's testimony strayed very far from the standard "data dependent" speech notes that have circled the Fed over the past year.

With Jackson Hole now fading into memory, investors are pivoting to face a dangerous week: US Durable Goods Orders, Gross Domestic Product (GDP) growth, and Personal Consumption Expenditure Price Index (PCE) inflation. The key data release this week will be PCE inflation, which is slated for Friday. Markets are still betting that the Fed will be more concerned about rapidly declining US job figures than near-term inflation effects when the Fed's next interest rate call rolls around on September 17.

However, any unpleasantness in this week's PCE inflation print could throw a hard wrench into the works. Despite very real concerns that the US labor market is softening much faster than many expected, a sharp upswing in inflation will still be more than enough to push Fed policymakers deeper into their long-running wait-and-see approach before making any hard calls on moving rates.

Dow Jones daily chart