|

Dow Jones Industrial Average softens after weak ISM PMI print

  • The Dow Jones saw early declines on Tuesday after ISM Services PMI figures came in below expectations.
  • 44,000 remains a key inflection point for the major equity index.
  • US President Donald Trump has fresh tariff threats ahead of his latest trade deal deadline.

The Dow Jones Industrial Average (DJIA) took a hit early Tuesday, declining after United States (US) ISM Purchasing Manager Index (PMI) figures for July came in below expectations, adding further downside pressure to already-battered investor sentiment. US President Donald Trump issued fresh tariff threats on Tuesday, reiterating that he will increase tariffs on the European Union (EU) to 35% across the board if the EU government doesn’t fulfill its “obligations”, likely referring to a loose, preliminary handshake deal between Europe and the US to invest billions of dollars in American business infrastructure at some point in the future.

The Dow Jones fell to an intraday low of 43,917 before recovering its footing and pushing back into the day’s opening level near 44,200. The Dow has recovered from a recent decline that dragged the major equity index down nearly 4% top-to-bottom from record highs at 45,130, catching a technical bounce from the 50-day Exponential Moving Average (EMA) near 43,660. Despite snapping a six-day decline on Monday, the Dow still shows further signs of price action weakness as bulls struggle to muscle bids back over 44,250.

US PMI figures warn of trade and employment weakness

US ISM Services PMI survey results sank to 50.1 in July, flubbing an expected increase to 51.5 from 50.8. Digging deeper into the data, most components of the ISM PMI report were in expansion territory, with the business activity, supplier deliveries, and prices index all showing improvement from the previous month. However, hiring expectations fell into contraction territory, with most businesses placing the blame on seasonal and weather factors. There were also sharp contractions in both new exports and imports activity expectations as tariff impacts continue to creep into US activity data.

Trump on trade: a tumultuous, ever-changing affair

US President Donald Trump reiterated that he would be kicking future EU tariff levels up to 35% if the EU doesn’t fulfill its trade and investment obligations to the US. Specific details, as always, remain limited, and Trump’s timeline on deadlines remains particularly fluid. The makings of a trade agreement between the US and the EU are in the works, but, as with most trade agreements secured by the Trump administration, specific details remain essentially non-existent, and none have been written into effective law by any government at this stage.

After promising steep secondary tariffs earlier this week on India for trading in Russian Crude Oil products, Donald Trump has shifted his focus on Tuesday back to Russia. Rumors that Russia is weighing offering a temporary air-truce offer in order to appease President Trump are in the water supply. However, according to reporting by the Financial Times, the Trump team could be poised to introduce fresh economic sanctions against Russia if Russian President Vladimir Putin doesn’t achieve a complete ceasefire with Ukraine by Friday.

Dow Jones 5-minute chart

Dow Jones daily chart

Economic Indicator

ISM Services PMI

The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector, which makes up most of the economy. The indicator is obtained from a survey of supply executives across the US based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that services sector activity is generally declining, which is seen as bearish for USD.

Read more.

Last release: Tue Aug 05, 2025 14:00

Frequency: Monthly

Actual: 50.1

Consensus: 51.5

Previous: 50.8

Source: Institute for Supply Management

The Institute for Supply Management’s (ISM) Services Purchasing Managers Index (PMI) reveals the current conditions in the US service sector, which has historically been a large GDP contributor. A print above 50 shows expansion in the service sector’s economic activity. Stronger-than-expected readings usually help the USD gather strength against its rivals. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are also watched closely by investors as they provide useful insights regarding the state of the labour market and inflation.

Author

Joshua Gibson

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

More from Joshua Gibson
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD clings to small gains near 1.1750

Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key data releases from the US and the ECB policy announcements.

GBP/USD edges higher toward 1.3400 ahead of US data and BoE

GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.

Gold holds gains above $4,300 on prospect of further Fed rate cuts

Gold price extends its upside to around $4,305, the highest since October 21, during the early Asian trading hours on Tuesday. The precious metal edges higher on further US Federal Reserve cut bets. The US Nonfarm Payrolls report will take center stage later on Tuesday. Also, the US Retail Sales and Purchasing Managers Index will be published. 

Ethereum: BitMine acquires 102,259 ETH as price plunges 5%

Ethereum treasury company BitMine Immersion scaled up its digital asset stash last week after acquiring 102,259 ETH since its last update. The purchase has increased the company's holdings to 3.96 million ETH, worth about $11.82 billion. BitMine aims to accumulate 5% of ETH's circulating supply.

NFP preview: Complex data release will determine if Fed was right to cut rates

The long wait is over, and the Bureau of Labor Statistics in the US will release nonfarm payrolls reports for both November and October at 1330 GMT on Tuesday. The overall NFP figure for October is expected to be -10k, however, it is expected to be influenced by a massive 130k drop in federal department workers. 

Solana Price Forecast: SOL consolidates as spot ETF inflows near $1 billion signal institutional dip-buying

Solana (SOL) price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout.