Dow Jones stumbles amid still hot inflation

The Dow Jones fell over 500 points on Thursday due to inflation complications and missed US GDP figures. The slowing growth is a positive for investors seeking an accelerated path towards rate cuts from the Federal Reserve, but sticky inflation continues to vex hopes for an early Fed rate trim. US GDP for the annualized first quarter grew by 1.6%, well below the forecast decline to 2.5% from the previous 3.4%.

However, an uptick in Core Personal Consumption Expenditures (PCE) in Q1 kicked the legs out from beneath rate cut hopes. Q1 Core PCE rebounded to 3.7%, climbing over the previous 2.0% and overshooting the forecast 3.4%. Headline PCE inflation also overshot, printing at 3.4% versus the previous 1.8%.

A slow, grinding equity recovery is underway in the US trading session, but the Dow Jones remains firmly off of the day’s early peak bids near 38,450.00. Around two-thirds of the individual securities that comprise the Dow Jones are in the red on Thursday, with IBM leading the charge down.

Dow Jones declined 1.82% top-to-bottom on Thursday, hitting a seven-day low of 37,745.54 and turning negative for the week. Despite the major equity index reclaiming nearly half of the day’s declines, the DJIA remains well back from the day’s peaks at 38,446.43.