DOW Sets Historic High Following FOMC Remarks, 10-Year Yield Hovers at 4%

The Dow Jones Industrial Average (DOW) achieved a historical milestone by ascending 1.40% to finalize at a record-breaking close of 37090.24. The surge occurred in the wake of the Federal Reserve delineating its strategy to trim interest rates in the forthcoming year. Although the market may experience some degree of fluctuation after this significant increment, the short-term market sentiment is predicted to remain optimistic. This outlook is contingent upon the DOW maintaining support above the level of 36010.85. If it does, the index may continue its upward trajectory toward the next short-term goal, which is the 100% extension of the previous increase from 28660.94 to 34712.28, starting at 32327.20, leading to a target of 38378.54.

Medium-Term Perspective

Looking further ahead, medium-term forecasts suggest that the DOW might aim for the 61.8% extension from its 2020 low of 18213.65 to its 2022 apex of 36952.65, originating from the 2022 trough of 28660.94, which stands at 40241.64. This level is noteworthy as it approaches the psychologically significant 40,000 mark.

The 10-Year Yield's Movement

Contrasting the index's climb, the 10-year Treasury yield saw a slight retraction, declining by 0.173 to position at 4.033, after momentarily slipping to 4.009. Despite this dip, yields managed to cling to the crucial 4% threshold. Near-term support is anticipated around the current level, which aligns with the 55-week Exponential Moving Average (EMA), now at 3.956, and a primary long-term trendline. Nonetheless, the 10-year yield is postulated to have concluded its ascending five-wave sequence that commenced from the 2020 nadir of 0.398, indicating that a corrective phase could be emergent. A substantial level of support may only manifest around the 3.253 mark, a convergence point near the 38.2% Fibonacci retracement of the ascent from 0.398 to 4.997, positioned at 3.240.

DOW, FOMC, yield