The Dow Jones Industrial Average (DJIA) experienced a volatile session on Tuesday, initially falling following weaker-than-expected US Purchasing Managers Index (PMI) data, but later recovering as investors shifted focus to expectations of a potential Federal Reserve rate cut. The market remains largely on edge as traders await the long-anticipated tariff announcement from President Donald Trump, which he has labeled as “Liberation Day.”
Although the exact details of the upcoming tariffs are unclear, speculation has been rife since Trump took office in January 2025. Over the past 71 days, the administration has repeatedly announced, adjusted, and backtracked on various tariffs. The latest round could include import taxes on automobiles, lumber, and pharmaceuticals, alongside broad tariffs targeting many of the US’s largest trade partners. Trump is expected to provide further details during a ceremony in the White House’s Rose Garden at 1900 GMT (4 pm EST) on Wednesday.
The economic outlook was further dampened by the US ISM Manufacturing PMI for March, which fell unexpectedly to 49.0 from 50.3. Economists had forecasted a figure closer to 49.5 or higher. The drop is seen as a sign of businesses bracing for the impending tariff measures. The ISM Manufacturing New Orders Index also took a significant hit, plunging to a two-year low of 45.2, marking the second consecutive month of decline.
Despite these bearish economic indicators and growing concerns over the impact of tariffs, markets have shifted their attention to the Federal Reserve. Rate traders are increasingly betting on further easing from the central bank, with nearly 80% odds of a 25 basis point rate cut at the Fed’s upcoming policy meeting on June 18, according to the CME’s FedWatch Tool.
Stock Market Update
Most major equity indexes traded near flat on Tuesday. The Dow Jones hovered around 200 points below Monday’s close, near the 41,800 mark. The S&P 500 edged lower, slipping below 5,600, while the Nasdaq Composite remained steady at approximately 17,300.
Tesla (TSLA) saw a 4.7% rebound, recovering to $271 per share, although it remains well below its December 2024 peak of over $435. On the downside, Southwest Airlines (LUV) dropped 6.8%, falling to $31 per share after being downgraded to an “underperform” rating by Jefferies analysts. The airline sector has been under pressure this week, with negative downgrades affecting stocks across the industry.
Market Outlook
The Dow Jones Industrial Average remains positioned near the 200-day Exponential Moving Average (EMA) around the 42,000 mark as investors await further developments on the tariff front and potential geopolitical risks. The index remains constrained near recent record highs just above 45,000 set in November 2024, though a solid technical support floor appears to be in place just north of the 40,000 level.
