Market Data 
- Dow Jones gets dragged down by declines in healthcare and biotech.
- Equities rebalancing after US markets return after holiday.
- Investors on the lookout for signs of rate cuts from cautious Fed.
The Dow Jones Industrial Average (DJIA) shed weight on Tuesday after US markets returned to action following an extended holiday weekend. The Dow Jones drew the short straw of the major US indexes, tumbling three-quarters of a percent as investors pull back on healthcare services and biotech stocks listed on the Dow Jones.
All four of the health-related stocks listed on the Dow Jones are down steeply on Tuesday, dragging the major equity index into the red. The Conference Board’s consumer confidence and inflation outlook both accelerated in May, highlighting the difficulties lying ahead for the Federal Reserve (Fed) to deliver rate cuts as fast and as furious as investors continue to hope for. With economic activity continuing to flaunt broad-market forecasts for a downturn that has yet to materialize, and consumer fears of inflation anchoring realized inflation higher, the Fed’s options for trimming interest rates have been hobbled looking forward.
The CB’s Consumer Confidence Index rose to 102 on Tuesday, up from the revised previous of 97.5, and rising above the forecast 96. CB consumer 12-month inflation expectations also rose to 5.4%, with the share of those expecting higher rates rising to 56.2%.
Investors will be looking ahead to Thursday’s US Annualized Q1 Gross Domestic Product (GDP), which is expected to ease to 1.3% versus the previous 1.6%. Friday’s Core US Personal Consumption Expenditure (PCE) inflation is forecast to hold at 0.3% MoM in April.
Dow Jones news
The Dow Jones is sharply lower compared to its peer US indexes, shedding over 300 points as healthcare stocks send the equity board into its lowest since the beginning of the month. Over two-thirds of the DJIA are in the red on Tuesday, with losses being led by three of the four listed health-associated securities.
Merck & Co Inc. (MRK) is down -2.7% at $126.00 per share, closely followed by biotech firm Amgen Inc. (AMGN), which shed -7 points, falling -2.33% and dropping below $300.00 per share for the first time since the start of the month. Johnson & Johnson (JNJ) also fell -1.81% to $144.31 per share.
Dow Jones technical outlook
The Dow Jones Industrial Average fell back below 38,800.00 on Tuesday as the index sheds over 300 points and shows no signs of slowing. The index has tumbled nearly nine-tenths of a percent on the day, and the index is now down 3.5% from record highs just above 40,000.00.
Despite trading deep into bull country above the 200-day Exponential Moving Average (EMA) at 37,220.31, the Dow Jones is poised for further technical downside as the index tumbles through the 50-day EMA at 38,907.10.
Dow Jones five minute chart
Dow Jones daily chart
Economic Indicator
Core Personal Consumption Expenditures – Price Index (MoM)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The MoM figure compares the prices of goods in the reference month to the previous month.The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
