The Dow Jones Industrial Average struggled to advance on Tuesday, held back by a hotter-than-expected ISM PMI report for December. The strong business survey results raise fears that the Federal Reserve will hold off on planned rate cuts, impacting investor sentiment.
The Dow Jones was stuck near 43,000 on Tuesday. US ISM PMI figures for December came in significantly higher than anticipated. These strong business survey results are rekindling concerns about fewer Fed rate cuts .
The Dow Jones Industrial Average (DJIA) fluctuated on Tuesday as technology stocks reversed recent gains, with investors moving away from their optimistic outlook after the December ISM Purchasing Managers Index (PMI) exceeded expectations, dampening hopes for rate reductions in 2025. Equity markets aiming to continue last year's AI-driven tech rally into the new year encountered a setback on Tuesday, with key tech stocks retracing their recent advances. Profit-oriented investors are pushing for their preferred semiconductor companies to further capitalize on the demand from the AI technology sector, even as the segment focused on selling AI solutions to consumers and businesses struggles to establish profitable revenue models. ISM's Services PMI for December surpassed the median market forecasts, reaching 54.1 compared to the anticipated 53.3, and rebounding strongly from the previous month's 52.1. ISM Services Prices Paid survey results also accelerated to a 22-month high of 64.4 in December compared to November's 58.2. With business activity outlook broadly improving faster than anticipated, and prices paid by businesses showing signs of rising again, investors are apprehensive about persistent inflation exceeding previous expectations. Robust business activity growth coupled with increasing producer prices will make it more challenging for the Federal Reserve (Fed) to deliver as many rate cuts as traders had hoped. According to CME's FedWatch Tool, rate traders now anticipate the Fed to delay further rate cuts until June. The Fed is expected to maintain interest rates steady throughout most of the first half of 2025
Dow Jones ISM PMI Rate Cuts Federal Reserve Inflation
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