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The Dow Jones Index retreated on Thursday, losing -527 points and tumbling below 39,150.00 as investors pulled back in the face of declining hopes for a September interest rate cut from the Fed.
On the US data front; S&P Global Services Purchasing Managers Index (PMI) rose to a 12-month high of 50.9 for May, this data was released on Thursday, well above the forecast steady print at 50.0.
Accelerating services activity bodes poorly for investors desperate for signs of a rate trim from the Fed. Fitch Ratings warned the entire market on Wednesday that services inflation will likely remain sticky for some time, keeping rates elevated for much longer than many investors have been hoping for.
According to the CME’s FedWatch Tool, rate traders are pricing in barely 50% odds of at least a quarter-point cut from the Fed in September, down significantly from the 70% odds priced in at the beginning of the trading week.
US data will have one last chance to throw investors a bone on Friday, with US Durable Goods on the table.
US Durable Goods in April are expected to decline -0.8% MoM, down sharply from the previous month’s 2.6%. The University of Michigan’s Consumer Sentiment Index in May is forecast to tick upwards to 67.5 from the previous period’s 67.4, while UoM 5-year Consumer Inflation Expectations are expected to remain pinned at 3.1% in May.
The Dow Jones is sharply lower on Thursday as the US market’s worst-performing equity index. All of the Dow Jones’ constituent securities are in the red for the day, with losses led by Boeing Co. (BA), which is getting absolutely shattered on Thursday.
BA tumbled -6.75% to $173.68 per share after the company announced negative cash flow with no expectations of the battered airplane manufacturer’s deliveries recovering in the second quarter.
Technical Outlook
The Dow Jones sees accelerating losses as the index turns bearish, falling back from record highs above 40,000.00. Thursday has been incredibly one-sided intraday trading, tumbling from the day’s early peaks near 39,760.00.
Dow is slipping back towards the 50-day Exponential Moving Average (EMA) at 38,908.36. Despite near-term declines, the index is still buried deep in bull country, with the index trading well above the 200-day EMA at 37,141.05.
