(BEA)
The Dow Jones Industrial Average (DJIA) had a turbulent overnight session and continued on a rollercoaster ride during Thursday’s trading window as investors flocked back to the technology sector. This came after a decision by the US Federal Courts to strike down President Donald Trump’s wide-ranging “reciprocal” tariffs, causing further turmoil in the markets as investors await the administration’s response.
Driven by the International Emergency Economic Powers Act (IEEPA), President Trump has been struggling to implement broad import taxes, with limited success. The administration has faced setbacks and delays in its attempts to impose tariffs, leading to confusion and unpredictability within the White House. The government-imposed import fees have become a tool used by the administration to generate revenue and pressure other countries into creating more favorable trade deals.
In a blow to President Trump’s trade policies, the US Court of International Trade ruled against his “Worldwide Retaliatory Tariff Orders” on Wednesday, stating that the tariffs exceed the powers granted by the IEEPA, which allows the President to impose trade restrictions during a national emergency without Congressional approval. The Trump administration is expected to expedite the appeals process in order to bring the decision before the Supreme Court, which has previously sided with the President over legal precedent.
On Thursday, US data painted a mixed picture, with some indicators showing poor performance. This put further pressure on equities, although to a limited extent. Pending Home Sales dropped to a one-year low of -6.3%, while Initial Jobless Claims rose more than expected to 240K. The Q1 Gross Domestic Product (GDP) also contracted by 0.2% on an annualized basis. Friday’s release of the US Personal Consumption Expenditure Price Index (PCE) for April will be closely watched by investors as it is the Federal Reserve’s preferred measure of inflation. The PCE price growth has a direct impact on the timing and magnitude of potential interest rate changes by the Fed.
The Dow Jones Industrial Average retreated from its weekly highs during the overnight session and fell back to the 42,000 level. The index is currently consolidating near the 200-day Exponential Moving Average (EMA) at 41,685. The next key economic release will be the US Bureau of Economic Analysis (BEA)’s preliminary report on Thursday, May 29, 2025, at 12:30 PM, which is expected to show a contraction of 0.2% in the Quarterly GDP.