Dow Jones Industrial Average falls back after US GDP flubs expectations but inflation still hot

• Dow Jones backslides over 500 points as investors balk at inflation complications.
• US GDP eased quicker than expected, jostling risk appetite.
• Equity recovery is under way, but remains limited.

The Dow Jones hit its lowest bids in a week after US Gross Domestic Product (GDP) figures missed forecasts and US Core Personal Consumption Expenditures (PCE) inflation came in higher than expected. Slowing growth is a boon for investors seeking an accelerated path towards rate cuts from the Federal Reserve (Fed), but sticky inflation continues to vex hopes for an early Fed rate trim.

Read more: US GDP expands less that expected in Q1

US GDP for the annualized first quarter grew by 1.6%, well below the forecast decline to 2.5% from the previous 3.4%. It represents the slowest pace of GDP growth since September of 2022, but an uptick in Core 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% as inflation remains hotter than investors hoped.

Dow Jones news

The Dow Jones plunged into negative territory for the week, knocking below 37,800.00 and declining over 550 points on the sour US data prints. 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 International Business Machines Corp. (IMB) leading the charge down. IBM is down over 8% at the time of writing, declining to $168.77 per share. IBM is closely followed by Caterpillar Inc. (CAT), down around 6.5% on the day and trading near $340.12. The DJIA's top gainer on Thursday is Merck & Co Inc. (MRK), climbing nearly 3% to trade into $130.63 per share.

Dow Jones technical outlook

The 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.

Despite the Dow Jones on pace for a second down day in a row, the index is still firmly planted in bull country, trading well above the 200-day Exponential Moving Average (EMA) at 36,700.41.

Dow Jones five-minute chart