Dow Jones Industrial Average finds its footing as bond yields ease back

• The Dow Jones found a foothold near the 42,000 level on Thursday.
• President Trump's tax bill survived the House and now heads to the Senate.
• US PMI figures rebounded firmly in May, flouting market forecasts.

The Dow Jones Industrial Average (DJIA) bounced off a fresh bottom on Thursday, clawing its way out of the basement after a sharp tumble during the midweek trading window. On Wednesday, bond yields rose and equities took a hit as fresh concerns about the United States(US) government's ever-increasing debtload emerged. Investors have seemingly shrugged off their concerns and resumed bidding up stocks after Congressional Republicans successfully pushed through President Trump's "big, beautiful bill" on the federal budget and taxation, which is expected to add trillions to the federal deficit over the next ten years.

Despite a bullish tilt to Thursday's market action, bond markets remain on shaky footing. The 30-year Treasury yield is still parked north of 5%, and despite a slight easing, the 10-year yield remains above 4.5%. Rising funding costs come at a time when the Trump administration is hoping to help alleviate budget pressure from its planned steep tax cuts using cheap debt. However, rising (or at least sticky) bond yields, coupled with a Federal Reserve (Fed) that remains staunchly apprehensive about cutting interest rates ahead of possible economic fallout from Trump tariffs, are systematically taking a hatchet to those plans.

US Purchasing Managers Index (PMI) figures rose in May as business operators pivoted toward optimism more than expected in the aggregate. The Services and Manufacturing components of the indexed business survey results both rose to 52.3, from 50.2 for Services and 50.8 for Manufacturing.

Dow Jones price forecast

The Dow Jones Industrial Average tested the 200-day Exponential Moving Average (EMA) near 41,640 early Thursday before equity markets found their footing and pushing intraday bids back into the 42,000 handle. Price action is still overall bullish, but a near-term decline has bled some of the wind out of the Dow Jones' sails.

Dow Jones daily chart