Dow Jones Industrial Average recovers ground after a loss-heavy week

• Dow Jones rebounds from lows near 38,000.00 after heavy backslide.
• Market sentiment recovering as rate cut hopes rise once again.
• US PCE Price Index inflation cools faster than expected.

The Dow Jones Industrial Average (DJIA) rebounded over 250 points on Friday as investor sentiment turned higher after US Personal Consumption Expenditures (PCE) Price Index inflation eased faster than expected. Rate markets are once again pricing in better-than-even odds of a September rate cut from the Federal Reserve (Fed). The Dow Jones is also getting bolstered by a strong rebound in Salesforces Inc. (CRM) after the management company missed revenue expectations for the first time since 2006, sparking a steep 20%+ decline in the stock.

US PCE Price Index inflation eased to 0.2% MoM in April, coming in below the forecast steady hold at 0.3%. US Personal Spending also declined more than expected in April, falling to just 0.2% MoM versus the forecast 0.3% and further down from the previous month’s revised 0.7%.

With inflation pressures showing further signs of cooling, investors are once again pivoting to hopes for a September rate cut from the Fed’s Federal Open Market Committee (FOMC). According to the CME’s FedWatch Tool, rate markets are pricing in only a 48% chance of no rate change in September.

Dow Jones news

The Dow Jones is broadly higher on Friday, with over two-thirds of the index’s constituent securities in the green for the day. Amazon Inc. (AMZN) slid -2.5% to $174.77 per share despite announcing progress on Amazon’s planned drone delivery services as investors remain skeptical the delivery company will be able to see returns on its automated delivery plans.

Salesforce Inc. (CRM) is up 5.5% on Friday, trading above $230.00 per share as the stock slowly recovers from a harsh selloff earlier in the week. CRM backslid over -20% this week after the management software company missed earnings expectations by $40 million dollars. CRM reported Q1 revenues of $9.133 billion, an 11% increase YoY, while median analyst estimates expected revenue of $9.145 billion. CRM also issued lowered forward guidance for growth and earnings as the long-standing company struggles to find new customer markets to break into.

Dow Jones technical outlook

The Dow Jones is rebounding from steep near-term declines, testing into 38,380.00 after hitting a fresh May low near 38,000.00 this week. The major equity index has declined in all but three of the last ten consecutive trading days, and the DJIA is still down -4.2% from record highs set just above 40,000.00 on May 20.

The Dow Jones is still trading north of the 200-day Exponential Moving Average (EMA) at 37,220.72, but sharp near-term declines leave the index far below all-time highs and grappling with short pressure. 

Dow Jones five minute chart

Dow Jones daily chart