The Dow Jones Is Steadily Growing
In late July, US stocks saw a rise as investors awaited earnings reports from Alphabet and Microsoft and a crucial interest rate decision by the Federal Reserve on Wednesday. Recent news has caused the Dow Jones to increase by 250 points, resulting in its longest winning streak since 2017.
The Fed meeting
The two-day meeting of the Fed determined the future of monetary policy, with most market analysts anticipating a rise in interest rates for July. However, some believed this could be a result of the Bank’s tightening cycle.
The Fed rate currently stands at 5.25% – 5.50%. Additionally, the Conference Board’s consumer confidence index hit its highest level since July 2021, indicating a strong economic outlook. In July, the index increased by 117 points, with more Americans reporting positive sentiments about their family finances.
Index on the rise
On the following Monday, the Dow Jones index closed higher for the 15th consecutive day and is expected to continue this trend, marking its first 15-day winning streak since February 2017.
The Dow has gained 5.2% since the winning streak began on July 10th, with investors showing favor to strong second-quarter earnings reports and investing in AI-related technology stocks, such as Microsoft and Salesforce.
Ryan Detrick, Chief Market Strategist at The Carson Group, believes that the Dow’s current success indicates potential for further gains and no recession on the horizon.
Historical overview
Based on data analysis, it has been found that the Dow Jones has only achieved an 11-day winning streak five times since World War II. Nonetheless, the future returns are overwhelmingly positive.
Blue Chips have a proven track record of delivering outstanding returns. Within three months, their value has increased by 100%, yielding an average profit of 5%. Similarly, after six months, their value has consistently gone up by 100%, with an average return of 11%. Even after 12 months, there is an 80% likelihood of blue chips increasing in value, with an average profit exceeding 8%.
It is noteworthy that the Dow experienced a higher gain one year later, except for the year 1987, when the infamous Black Monday crash occurred, leading to a 23% decline in Dow’s value on October 19th. Nonetheless, the analysis conducted by Detrick indicates that stocks have a high probability of maintaining their upward trajectory, which is a positive sign for the overall US economy.
In a tweet, Detrick stated that recessions or bear markets are not visible during a certain occurrence. He also pointed out a rise in home prices and a boost in consumer confidence, using this data to affirm that there is no recession on the horizon.
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