Dow Jones Industrial Average backslides on Wednesday after US PMIs go in both directions

• The Dow Jones shed 300 points in the midweek market session.
• Investors balked after US PMIs came in firmly mixed.
• US Manufacturing set to slow further, but Services PMIs expanded.

The Dow Jones Industrial Average (DJIA) shed 300 points on Wednesday after US Purchasing Managers Index (PMI) figures came in broadly mixed, entirely reversing course on forecasts. US equity markets pulled back, however rate markets still see 100% odds of a September rate cut from the Federal Reserve (Fed). Still, a lopsided economic data release will put additional pressure on upcoming calendar prints through the rest of the week.

July’s US Manufacturing PMI tumbled back into contraction territory for the first time since January, easing to 49.5 compared to the previous month’s 51.6 and flouting the forecast uptick to 51.7. Meanwhile, US Services PMI survey results surged to a 26-month high of 56.0 compared to the previous 55.3, and well above the forecast backslide to 54.4.

A mixed PMI print did little to support broad market sentiment, sending equities lower and investors bracing ahead of further key US data due this week. Thursday’s annualized Q2 Gross Domestic Product (GDP) is expected to rise to 2.0% from the previous 1.4%, while the QoQ GDP figure for Q2 is forecast to ease back to 2.6% from the previous 3.1%.

Friday’s Personal Consumption Expenditure Price Index (PCE) inflation will be the week’s critical data print. As the Fed’s preferred method of tracking inflation, a miss in core PCE Price Index could send investors heading for the hills or stepping further into risk-on bets on rate cut hopes. June’s YoY core PCE inflation is forecast to tick down slightly to 2.5% from 2.6%, with the MoM figure expected to hold steady at 0.1%.

Dow Jones news

Roughly two-thirds of the Dow Jones’ constituent securities are in the red on Wednesday, with losses being led by Intel Corp. (INTC) which tumbled around -3.5% to $255.40 per share. On the high side, Verizon Communications Inc. (VZ) rose 2.34% to $39.80 per share.

Dow Jones technical outlook

The Dow Jones is adding onto a recent pullback from all-time highs as the index slides back towards 40,000.00. The DJIA set a record peak bid of 41,371.38 last week, but the index is now trading down -3.5% in a brief pullback.

An extended pullback will see the Dow Jones challenging the 50-day Exponential Moving Average (EMA) at 39,472.52, with a long-term technical floor priced in at the 200-day EMA at 37,862.50.

Dow Jones five minute chart

Dow Jones daily chart