The Dow Jones reached its highest level in two years yesterday, rising 520 points. The strongest impetus came from the core PCE price index, which fell more sharply than expected. Falling inflation is strengthening investors' belief that the Fed will abandon its aggressive path. Fed Chairman Jerome Powell will speak this Friday. Even if he chooses his words carefully, there could be one or two hints about the Fed's future monetary policy. In the run-up to Powell's speech, the PMI figures for the manufacturing sector will be published. Even if these are expected to rise, they will almost certainly remain well below the 50.0 mark above which growth is indicated, putting further pressure on the Fed.

If today's statements by Powell provide any indication of an easing of monetary policy, 36,000 points is the level that the Dow Jones could surpass today. The next resistance level could then be 36,200 points. However, if Powell, contrary to expectations, convincingly points to a continued restrictive course by the Fed, the 36,000 point mark is likely to recede into the distance and the index could lose yesterday's gains.

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