Dow Jones Industrial Average recovers footing on Thursday after US GDP softens, but still remains lower

• Dow Jones is looking up from the bottom after another gap lower.
• US GDP growth eased as-expected, keeping investors hopeful for rate cuts.
• Steep losses in key equities are keeping indexes sharply lower.

The Dow Jones Industrial Average (DJIA) kicked off Thursday with another bearish gap after overnight trading dragged key securities steeply lower. However, market action in the US session is finding a floor in prices as investors dare to hope for signs of further easing in the US economy.

US Q1 Gross Domestic Product (GDP) grew by 1.3%, in-line with market forecasts and easing from the previous 1.6%. Core Personal Consumption Expenditures (PCE) QoQ also ticked lower to 3.6% when markets expected a hold at 3.7%. With US growth and price inflation showing further signs of cooling off, investors are stepping back into hopes for rate cuts from the Federal Reserve (Fed). 

According to the CME’s FedWatch Tool, rate markets are once again pricing in better-than-even odds of at least a 25–basis-point rate trim from the Fed in September. The target rate probability sees only a 49% chance of rates holding at their current level when the Federal Open Market Committee (FOMC) meets in September.

With Thursday figures in the rearview mirror, investors will be pivoting to Friday’s key inflation print, the US PCE Price Index. April’s Core PCE Price Index inflation is expected to hold steady at 0.3% MoM, with YoY Core PCE Price Index inflation also expected to hold at 2.8%. As the Fed’s preferred method of measuring inflation, markets will be watching Friday’s data print closely.

Dow Jones news

Of the 30 constituent securities that make up the Dow Jones, nearly all of them are in the green on Thursday, but steep losses in key equities are keeping the index hobbled. 

Salesforce Inc. (CRM), a key cloud-based software company that is a principal player in customer relationship management software, is steeply lower after reported quarterly revenues missed Wall Street expectations. Salesforce reported Q1 earnings of $9.13 billion, slightly lower than analyst estimates of $9.17 billion. CRM also issued lower-than-expected guidance, and this is the first time that CRM has missed expectations since 2006. CRM is down nearly -21.5% on Thursday, falling to $213.62 per share.

Dow Jones technical outlook

The Dow Jones is moderating near 38,100.00 on Thursday, holding steady after a bearish gap down to kick off the day’s trading session. The DJIA is still down from Wednesday’s closing bids near 38,500.00, but priced in an early floor near the 38,000.00 handle.

The Dow Jones is down sharply from record highs set just above 40,000.00 nearly two weeks ago, falling over 5% peak-to-trough. The DJIA is grinding back towards the 200-day Exponential Moving Average (EMA) at 37,233.38, a key technical barrier the Dow Jones hasn’t hit since November of 2023.

Dow Jones five minute chart

Dow Jones daily chart