The Dow Jones (DJIA) is taking a breather on Tuesday as the market braces for the widely anticipated Fed interest rate decision tomorrow where the central bank is expected to cut rates by 25 bps. A 50 bps cut is also on the table, although the odds are slim at 3.9%, according to CME’s FedWatch tool.
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August’s U.S. retail sales grew by 0.6% month-over-month, well above the estimate of 0.2% and signaling the resilience of the consumer. The control group for retail sales, which excludes volatile items like autos and gas, notched a 0.7% gain compared to the estimate for 0.4%.
At the same time, labor market weakness and the risk of a resurgence in inflation could send retail sales growth lower in the coming months. “Households still generally have the means to spend, but growing concerns over the labor market suggest that we will likely see a pullback in the pace of spending growth for the remainder of the year,” said Wells Fargo senior economist Sam Bullard.
The better-than-expected data contributed to the Atlanta Fed raising its third-quarter GDP estimate to 3.4%, up from 3.1% on September 10. If it holds, it would be the highest GDP growth since the third quarter of 2023. The estimate, which is derived from an objective mathematical model, received a boost from third-quarter real personal consumption expenditures (PCE) growth, which is now estimated at 2.7%, up from 2.3%.
The Dow Jones is down by 0.23% at the time of writing.
Which Stocks are Moving the Dow Jones?
Let’s pivot to TipRanks’ Dow Jones Heatmap, which illustrates the stocks that have contributed to the index’s price action.
Apple (AAPL) is leading all tech stocks on Tuesday following the debut of its new lineup of iPhones last week, which includes the first iPhone Air. Other product releases include new AirPods and watches. AAPL is up by nearly 3% during the past five trading days.
Meanwhile, Chevron (CVX), the only energy company within the Dow Jones, is catching a bid on rising oil futures as a result of Ukraine striking Russian oil refineries.
Elsewhere, most financial stocks are muted ahead of the Fed rate decision tomorrow. Higher rates generally benefit banks because they make loans more profitable than the interest banks pay on deposits.
DIA Stock Moves Lower with the Dow Jones
The SPDR Dow Jones Industrial Average ETF (DIA) is an exchange-traded fund designed to track the movement of the Dow Jones. As a result, DIA is falling alongside the Dow Jones today.
Wall Street believes that DIA stock has room to rise. During the past three months, analysts have issued an average DIA price target of $501.32, implying upside of 9.27% from current prices. The 31 holdings in DIA carry 29 buy ratings, two hold ratings, and zero sell ratings.
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