Dow Jones Falls as Fed Rate Cut Hopes Fade and Tariff Worries Rise

The Dow Jones Industrial Average (DJIA) slipped on Thursday, marking its weakest performance in more than a week. Markets continue to face pressure as investors question high stock valuations and weigh the impact of inflation tied to tariffs.

• The Dow dipped to 44,600 before bouncing slightly to 44,750.
• Traders are cautious ahead of Fed Chair Jerome Powell’s Jackson Hole speech.
• PMI data beat forecasts, but tariff fears keep investor sentiment muted.

Dow Jones Technical Picture

The Dow remains above the 50-day Exponential Moving Average (EMA) near 44,000, offering some cushion. Still, the index is struggling below the 45,000 resistance level, and a return to record highs above 45,277 looks increasingly difficult.

Market momentum has slowed, and traders are wary of further downside if Fed policy signals disappoint.

Jackson Hole Symposium in Focus

The annual Jackson Hole Economic Symposium kicked off Thursday, drawing global attention. Investors are watching closely for policy cues, with Powell’s speech on Friday expected to set the tone.

The CME FedWatch Tool shows a 75% chance of a September 17 rate cut, down from 90% last week. Shifting Fed concerns — from weak labor data to tariff-driven inflation — are shaking confidence in aggressive rate cuts.

PMI Reports: Strong but Tariff-Shadowed

Fresh data from S&P Global’s Purchasing Managers Index (PMI) provided mixed signals.

• Manufacturing PMI rose to 53.3, its highest level in 39 months.
• Manufacturing Output Index climbed to 55.2, also a multi-year high.

Despite the upbeat numbers, businesses remain anxious about tariffs. Many firms are stockpiling inventory to brace for supply chain disruptions, a move that increases pricing power but also pushes more costs onto consumers.

Walmart Stock Slides After Earnings Miss

Walmart (WMT) became the biggest drag on the Dow, falling around 5% on Thursday. The retail giant lifted its full-year earnings and sales outlook, yet missed quarterly profit estimates for the first time in over three years.

• Walmart expects net sales growth of up to 4.75% this fiscal year.
• Strong online sales and store performance highlight resilient demand.
• Still, tariffs are raising prices across key product categories.

Chief Financial Officer John David admitted that while Walmart absorbed some tariff costs, more have already been passed to shoppers. He warned that additional increases are inevitable if tariffs continue to climb.

Market Outlook

For now, the Dow faces a balancing act between strong corporate fundamentals and macro headwinds from tariffs and Fed policy uncertainty. Friday’s Powell speech at Jackson Hole could determine whether the index steadies near support or faces a deeper pullback.

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