Dow Jones Industrial Average recoils again as risk aversion sets in

• The Dow Jones backslid another 100 points on Thursday.
• Equities are facing further downside as US tariffs weigh on car manufacturing.
• Financial agencies are stepping up their warnings of risks to the US economy.

The Dow Jones Industrial Average (DJIA) headed lower for a second straight day on Thursday, declining another 100 points to fall one-quarter of one percent. The major equity index is testing below 42,400 as investors grapple with a fresh bout of tariff threats from the Trump administration.

United States (US) President Donald Trump has slated a 25% tariff to be imposed on all vehicles imported into the US, to begin on April 2 in tandem with a wide-reaching package of "reciprocal" tariffs across the board. Standard & Poors Global (S&P Global), Fitch Ratings, Moody's, and the Congressional Budget Office (CBO) all took the opportunity to highlight risk clouds that are beginning to gather over the US economy as the Trump administration pursues an us-vs-everybody trade standoff with all of the US's trading partners at the same time.

US Gross Domestic Product (GDP) figures for 2024's fourth quarter came in slightly higher than expected, with the US economy growing by 2.4% on an annualized basis, slightly beating median market forecasts of 2.3%. However any celebrations about US growth were quickly hobbled by the Moody's ratings agency, who followed up economic warnings earlier this week with a fresh klaxon that higher tariffs and tax cuts will dramatically boost government deficits. According to Moody's, the financial agency is moving closer to downgrading the quality of US debt, a move that would likely spark a rise in Treasury yields, making US debt even more expensive.

S&P Global warned that US policy uncertainty will hamper global growth outlook, as well as economic prospects across the board. Fitch Ratings noted that US tariffs, if implemented as they currently stand, will have a devastating impact on smaller economies including Brazil, India, and Vietnam, which will make it harder, not easier, for emerging market (EM) economies pivot into being a net purchaser of US goods and services like President Trump wants.

CBO slashed its own US growth forecasts on Thursday, shifting its 2025 GDP forecast to just 1.9%, an annual growth figure the government office doesn't expect the US to overcome for the foreseeable future, all the way out to 2035, where they see US growth slowing even further. CBO also expects the rate of inflation slowing within the US economy to functionally grind to a halt in 2025. CBO, in line with recent Federal Reserve (Fed) forecasts, now expects the current pace of inflation to remain stubbornly high until some point in 2027.

The CBO also expects US the US budget deficit to soar to 7.3% of GDP in 2025 unless federal agencies make changes to their current plans. According to CBO calculations, US debt servicing including interest payments are expected to take up 5.4% of annual US GDP by 2055 unless changes are made.

Stock news

Equity indexes are facing downside pressure on Thursday, however losses remain limited vehicle manufacturers exposed to planned Trump administration tariffs on all foreign-produced vehicles. According to rough estimates, nearly 40% of every single vehicle on US roads is manufactured or produced by foreign companies. As investors dig in their heels and hope for good signs soon. The Dow Jones is down roughly one-quarter of one percent, with the S&P 500 and Nasdaq Composite both trading within one-tenth of one percent from the day's opening bids.

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Dow Jones price forecast

The Dow Jones continues to test back into the 200-day Exponential Moving Average (EMA) near 42,000 as long-term bullish momentum bleeds out of the charts. Bidding action remains capped by the 50-day EMA just below the 43,000 price handle, and the Dow Jones' recent bullish recovery appears to be over and geared to price in its first lower-high pattern in almost two years.

Dow Jones daily chart