- The Dow Jones stuck to 40,000 on Friday after a brief dip on fresh tariff concerns.
- US data came in soft across the board, with consumer sentiment plummeting and PPI inflation easing.
- Ongoing trade tensions will continue to weigh on markets as China and the US square off.
The Dow Jones Industrial Average (DJIA) caught a late bid on Friday, rising back into the 40,000 major price handle after an early dip on rising tariffs between the US and China. China has raised tariffs on US imports to 125% as the country continues to retaliate against rocketing tariffs imposed on Chinese goods imported into the US, which have risen to 145%.
Despite triple-digit tariffs in both directions, White House personnel remain adamant that President Trump remains optimistic that a trade deal between the US and China will be reached, helping to bolster investor sentiment. The Dow Jones gained nearly 600 points on Friday, putting the major equity index up 1,800 points for the week. The DJIA still remains down sharply from record highs, but equities broadly recovered ground this week after the Trump administration pivoted away from its own lopsided “reciprocal” tariffs once again.
US Producer Price Index (PPI) inflation eased even faster than expected in March, with core PPI falling to 3.3% YoY. However, inflation pressures continue to cook in the background as markets wait to see how quickly tariff fallout will bleed over directly into the US economy.
University of Michigan (UoM) Consumer Sentiment survey results showed that broad-base tariff tensions are eating away at the consumer-level economic outlook and inflation expectations. The UoM Consumer Sentiment Index fell to multi-year lows of 50.8, and the Consumer Expectations Index declined to an all-time low of 47.2 as more consumers expect a recession in the coming year.
Consumer 1-year Inflation Expectations soared to 6.7% from 5.0%, and Consumer 5-year Inflation Expectations also accelerated to 4.4% from 4.1%. Consumers are growing increasingly uneasy in the face of widespread tariffs, and inflation expectations are at risk of becoming unanchored with import prices set to rise across the board.
Dow Jones price forecast
The Dow Jones Industrial Average caught another bid on Friday, just enough to muscle the Dow Jones back above the 40,000 handle to round out an incredibly volatile week. The DJIA hit 16-month lows near 36,600 before surging back into the high side on geopolitical headlines.
Price action is still caught on the bearish side of the 200-day Exponential Moving Average (EMA) at 41,875, but bullish momentum is on pace to continue grinding bids higher. A long-term technical inflection point rests at the 41,000 handle, near the mid-March swing low point.
Dow Jones daily chart
Economic Indicator
Producer Price Index ex Food & Energy (YoY)
The Producer Price Index ex Food & energy released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Those volatile products such as food and energy are excluded in order to capture an accurate calculation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).
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