Dow Jones Industrial Average softens, equities decline after US data deflates rate cut hopes

• Dow Jones backslid 0.6% after US Retail Sales, PPI inflation vex rate bets.
• US PPI inflation remains tight, as does the US labor market, Retail Sales recover.
• Declines across nearly all sectors pummel indexes.

The Dow Jones Industrial Average (DJIA) declined on Thursday after US data showed inflation, labor, and domestic consumer spending continue to run too hot, too tight, and too strong for markets broadly hoping for rate cuts from the Federal Reserve (Fed). Rate futures bets of a June rate cut receded after the US data print, and investors are pulling back from equities that have been testing all-time highs recently.

At the time of writing, the Real Estate and Utilities Sectors are the US market’s biggest losers, down 2.2% and 1.35% respectively. The upside remains thin, with the Energy Sector up a comparatively thin 0.8%, followed by Communication Services which is up around 0.5%.

Core US Producer Price Index (PPI) inflation held at 2.0% for the year ended February, refusing to ease to the median market forecast of 1.9%. Headline annualized PPI in February jumped to 1.6, well over the forecast uptick to 1.1%. The previous print of 0.9% was also revised slightly higher to 1.0%.

 US Retail Sales recovered to 0.6% in February, rebounding from the previous month’s -1.1% decline (revised down from -0.8%). Retail Sales missed the forecast of 0.8%, but the recovery was still firm enough to throw cold water on rate cut bets that are leaning into hopes of an economic recession in the US. 

Initial Jobless Claims for the week ended March 8 also printed stronger than expected, with 209K new jobless benefits seekers versus the forecast 218K. The previous week’s number of jobless claimants was revised to 210K from the initial print of 217K. 

Dow Jones news

Of the thirty equities listed on the Dow Jones Industrial Average, only six are in the green on Thursday. Microsoft Corp. (MSFT) is leading the bull charge, climbing 2.6% on the day to trade above $426.00. Apple Inc. (AAPL) follows closely behind, rising 1.5% to trade into $174.00.

Telecoms and financials are dragging down the Dow Jones on Thursday. Verizon Communications Inc. (VZ) is down 1.8%, trading below $40.00 per share, while JPMorgan Chase & Co. (JPM) is in the red by 1.5% and trading down into $188.00 per share.

Dow Jones Industrial Average technical outlook

The Dow Jones Industrial Average (DJIA) printed an outside bar on Thursday, setting both a new high and a new low compared to the previous day. The Dow Jones set a new high for the week at 39,224.19 before getting swamped into a fresh low below 38,800.00. 

The equity index has been pushed back below the 39,000.00 handle on Thursday. Bidders will note that the Dow Jones has a Fair Value Gap (FVG) ripe for the picking, while a supply zone is priced in from the 39,000.00 handle to 38,960.00. 

Dow Jones Industrial Average, 5-minute chart