Dow Jones Industrial Average knocks lower as tariffs come into effect

• The Dow Jones fell around 400 points on Thursday, buckling as tariffs weigh on key companies.
• Despite targeted declines in critical stocks, markets are generally brushing off Trump's tariffs.
• Reciprocal tariffs, which were initially announced in early April, appear to have finally come into effect.

The Dow Jones Industrial Average (DJIA) softened on Thursday, slipping back below 44,000 as freshly minted tariffs weigh on growth prospects for key companies listed on the major blue-chip index. United States (US) President Donald Trump appears to have finally muscled his "reciprocal" tariff bundle over the finish line, with steep import taxes imposed on virtually all goods imported into the US.

The Dow Jones is headed back into bearish momentum with the index testing down 3% from record highs above 44,130 posted just last week. The Dow is set for another challenge of the 50-day Exponential Moving Average (EMA) near 43,600 after catching a technical bounce from the key moving average last Friday, with intraday flows flubbing a topside push for the 44,500 level.

Tariffs kick off, but losses remain contained in key stocks

Global markets are largely shrugging off President Trump's package of reciprocal tariffs that went into effect Thursday morning, with the majority of market participants expecting that another deferment will be found. Despite an overall upbeat investor outlook for day one of global tariffs, risk factors from steep import taxes are piling up on Caterpillar (CAT), which fell 3% after the company warned that tariffs will continue to eat the company alive. Caterpillar's Q2 operating profit tumbled 18% compared to the same quarter in the previous year, matching similar declines in the industrial sector, and highlighting that comparatively limited tariffs up to this point are already having large impacts in key industries.

US weekly Initial Jobless Claims ticked up to 226K, accelerating over the forecast increase to 221K. Nonfarm Productivity also rose more than expected in the second quarter, climbing 2.4% QoQ compared to the expected 1.9% upswing. Coming up on Friday, University of Michigan (UoM) Consumer Inflation Expectations will round out the week's data docket.

Read more stock news: Apple stock continues advance after Wednesday's $100 billion announcement

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