Dow Jones Industrial Average bounces up on weak US data

• Dow Jones bounces up as soft US services data eases concerns about a “higher for longer” monetary policy outlook. 
• US Services activity softened against expectations in March with the Prices Paid sub-index posting its lowest reading in years. 
• Intel is leading losses in the Dow Jones after news of hefty losses in its foundry business.

The Dow Jones Industrial Average (DJIA) has moved into positive territory following a weak opening. The soft US services activity data has offered some relief to investors, increasingly concerned that a string of strong US macroeconomic releases would force the Fed to dial down their monetary easing plans.

The US ISM Services PMI eased to 51.4 in March from 52.6 in February against market expectations of a slight increase to 52.7. Beyond that, the Prices Paid sub-index retreated to 53.4 from 58.6 in the previous month. This is the lowest reading in years and suggests a disinflationary contribution to the economy.

All three main Wall Street Indexes have jumped after the data. The Dow Jones is lagging with a 1.2% advance, trading at 39,243, still well below the 40,000 high hit last week. The NASDAQ is leading gains with a 0.53% advance to 16,326, followed by the S&P 500, up 0.37% to 5,225.

Dow Jones news

The Energy sector is the best performer on Wednesday with a 0.65% advance followed by Industrials, up 0.61%. On the losing end, only three of the eleven sectors are in the red with Consumer Staples losing 0.99% followed by the Real State, down 0.25%.

Down to single stocks, the market is showing a more mixed picture. Intel (INTC) fell 7.2% to $40.88 following a report stating that its foundry business recorded an operating loss of $7 billion in 2023.

Next is Procter & Gamble (PG), down 2.54% to $156.52, and Johnson & Johnson (JNJ), losing 1.35% to $155.59.

On the positive side, Caterpillar (CAT) advances 1.7% to $372, followed by Apple (AAPL), which is 0.88% up at $170.37.

Dow Jones technical outlook

The technical picture is little changed from Tuesday, with the Dow Jones Index correcting lower, yet with the broader bullish trend still intact. Price Action remains contained between the 50% and the 61.8% Fibonacci retracement of the March rally, at 39,300, with bears in control after the rejection at the 40,000 psychological level last week. 

The 39,000 support area is holding sellers for now and closing the path to the trendline support, now at 38,850. On the upside, the index is struggling to breach the mentioned 50% Fibonacci retracement at 39,195. Further up at 39,457 and the mentioned 40,000 would be the next targets.

Dow Jones 4-Hour Chart