Dow Jones Industrial Average dips into losses as market sentiment falters

• Wall Street turns lower with investors turning cautious ahead of US CPI release.
• US inflation is expected to show mixed readings with levels well above the Fed’s 2% core target rate.
• The Dow Jones Index has found support at 38,540, although broader bias remains negative.
   

The Dow Jones Industrial Average (DJIA) has dropped into negative territory during Tuesday’s US morning session. The moderate risk appetite seen during the European trading session has waned in the US, with investors taking a cautious stance ahead of Tuesday’s US CPI release.

US Consumer Inflation is expected to have accelerated to 3.4% in March from the 3.2% annual rate in February. The core CPI, which scraps the impact of seasonal food and energy prices, is estimated to ease to 3.7% from a 3.8% annual reading for February. In any case, showing levels well above the Federal Reserve’s (Fed) 2% core inflation rate for price stability.

The cautious market mood has sent all the main Wall Street indices lower on Tuesday, although they are pulling back from session lows at the moment of writing. The Dow Jones drops 0.4% to 38,738, the S&P 500 drops 0.3% to 5,186 and the NASDAQ Index eases 0.15% lower to 16,225.

Dow Jones news

Among sectors, the Financials are getting the biggest blow with a 0.71% loss, followed by the Industrials, 0.5% lower, and Technologies, dropping 0.38%. Real Estate is the only sector showing some advance, up 0.7%, while Utilities and Consumer Staples are flat.

Travelers Companies (TRV) is the worst-performing stock in the Dow Jones, losing 2.3% to $225.28, followed by American Express (AXP) which is down 1.8% to $219.83. The biggest winners are Cisco Systems (CSCO), up 2.79%, to $49.59, and 3M (MMM), advancing 1.23% to $93.06.

Dow Jones technical outlook

The technical picture shows the Dow Jones index picking up after having tested the support area at 38,540. The broader trend, however, remains bearish with the pair correcting lower from March highs near 40,000.

A further decline below 38,540 would expose February’s low at  38,035. On the upside, the pair should breach the 39,340 resistance area to break the negative price structure and open the path toward the all-time high at 39,985. 

Dow Jones Index 4-Hour Chart