Dow Jones Industrial Average tumbles almost 400 points on Wednesday

• Dow Jones extends recent declines as investors pull back.
• US equities are broadly lower in the mid-week session.
• Declining bid-to-covers on Treasuries are spiking risk aversion.

The Dow Jones Industrial Average (DJIA) is broadly lower on Wednesday, shedding nearly 400 points and backsliding into 38,500.00. The major equity index is down nearly nine-tenths of a percent as investor sentiment sours.

Demand for Treasuries appears to be declining as bid-to-cover ratios on key Treasury auctions decline, putting downward pressure on equities and bolstering the safe haven US Dollar. An auction of 7-year Treasury notes on Wednesday showed a bid-to-cover ratio of 2.43, down from the previous 2.48. The US still has no trouble auctioning off bond issuance, but decreasing covering bids implies there could be declining interest in US bonds.

Wednesday is the last day of calm before the economic calendar kicks into high gear on US data, with Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) inflation due on Thursday and Friday, respectively.

Annualized US Q1 GDP is expected to ease to 1.3% versus the previous 1.6% on Thursday. On Friday, US PCE Price Index inflation is forecast to hold steady at 0.3% MoM. With investors desperate for signs of rate cuts from the Federal Reserve (Fed), markets will be hoping that economic activity figures and inflation data will continue to ease.

Dow Jones news

The Dow Jones backslid to its lowest bids since the beginning of the month, and is sharply lower after hitting all-time highs above 40,000.00 recently. All but five of the Dow Jones’ component securities are in the red on Wednesday, with Unitedhealth Group Inc. (UNH) tumbling over -4.4% to $481.33 per share, and declining -22.3 points. On the high side, Apple Inc. gained 0.86% to $191.62 per share after the tech company revealed their latest product line of AI-enabled smartphones.

Dow Jones technical outlook

The Dow Jones’ Wednesday declines have dragged the index below the 50-day Exponential Moving Average (EMA) at 38,895.97, and the DJIA is on pace to add another red day to the chart. The index continues to hold above the 200-day EMA at 37,232.07, but equity losses have dragged the Dow Jones down -4% from a record peak just above 40,000.00.

Dow Jones five minute chart

Dow Jones daily chart