E-mini Dow Plunges on Fed Rate Hike Fears, Global Economic Uncertainies

June E-mini Dow Jones industrial Average futures are plunging shortly after the cash market close on Friday as investors succumbed to end of the month selling pressure tied to a steep sell-off in shares of Amazon, worries over Fed rate hikes, a contraction in the economy, persistent inflation and COVID-related lockdowns in China.

At 20:03 GMT, June E-mini Dow Jones Industrial Average futures are trading 32852, down 976 or -2.89%. The SPDR Dow Jones Industrial Average ETF (DIA) settled at $329.69, down $9.60 or -2.83%.

Weak Sentiment Drives Tech Stocks Lower

In stock related news, Friday wrapped up one of the busiest week for the first-quarter earnings season and a particularly intense one for tech companies, which drove investor sentiment throughout the week.

Dow components Apple and Intel were huge drags on the blue chip average on Friday. Apple shares fell about 3.7% after management said supply chain constraints could hinder fiscal third-quarter revenue. Intel fell 6.9% after the company issued weak guidance for its fiscal second quarter.

Sharp Rise in Inflation Supports Next Week’s Fed Rate Hike

A measure that the Federal Reserve focuses on to gauge inflation rose in March, likely cementing the central bank’s intention to hike interest rates by half a percentage at its May 3-4 monetary policy meeting.

The core personal consumption expenditures price index (PCE), which measures costs that consumers pay across a wide swath of items and accounts for how behavior changes in response to market dynamics, increased 5.2% from a year ago, according to the Bureau of Economic Analysis.

Including volatile food and energy prices, the PCE index accelerated by 6.6%, the fastest pace since January 1982. Headline inflation was up 0.9% from February, much faster than the previous 0.5% increase.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed when sellers took out the previous low of the week at 33015. A trade through 35413 will change the main trend to up.

The minor trend is also down. A trade through 33968 and 34038 will change the main trend to up. This will also shift the momentum.

Short-Term Outlook

Investors are still looking for a value area to stop the price slide, while sellers are signaling stocks are overvalued.

The downside momentum late Friday suggests further liquidation into the futures close could reach a series of bottoms at 32578, 32218 and 32086.