Salesforce sinks below long-term support as Dow Jones index loses 41,000

• Salesforce stock sold off more than 4% on Thursday, the worst performer in the DJIA.
• CRM stock could lose its grip on a supportive trendline that began in late 2022.
• Dow sinks to a six-month low below 41,000.
• PPI for February showed firm-level core inflation fell compared to January.

 

Salesforce (CRM) stock led the Dow Jones Industrial Average (DJIA) lower on Thursday despite more positive news on the inflation front.

The headline Producer Price Index (PPI) showed that prices at the producer level were flat in February from a month earlier and dropped after excluding food and energy. The annual PPI inflation figure for February fell from January’s upwardly revised 3.7% to 3.2%. Additionally, Initial Jobless Claims for last week came in below consensus, and reports emerged that Russia is considering a 30-day ceasefire favored by the US and Ukraine in the three-year-old war. 

However, the broad market continued to focus on the Trump administration’s global trade war. US President Donald Trump threatened to hike tariffs on all alcohol imports from the European Union (EU) to 200% on Thursday after that body earlier in the week said it would target $26 billion worth of US goods with its tariffs in response to Trump’s 25% tariff on steel and aluminum worldwide.

The general move of the Trump administration toward tariffs has scared away many investors, who appear to be steadily trimming their allocation in US equities. The Dow Jones sank below the 41,000 support level on Thursday for the first time since last September and closed down 1.3%. That was an improvement over the NASDAQ, which lost roughly 2%. Elsewhere, the S&P 500 sank more than 10% below its all-time high on Thursday, giving the index its first proper correction since 2023.

Salesforce stock news

Salesforce stock descended to $270.90 on Thursday, down 4.8% in the session. Much of the negative sentiment comes from general distaste for the enterprise software industry. 

Other competitors in that industry like ServiceNow (NOW) and Atlassian (TEAM) also traded lower on Thursday. ServiceNow sold off a similar 4.1%, and Atlassian lost a steeper 8.1%. 

All of these companies normally trade at higher valuations than other industries due to better growth prospects and higher margins. Still, investors worry that could come to a halt if the US economy enters a recession. The Atlanta Fed’s GDPNow indicator is predicting a 2.4% annualized decline in US GDP in the first quarter on a seasonally-adjusted basis. The rule is that two quarterly declines in a row are necessary to indicate a recession.

When Trump first raised 25% tariffs on Mexico and Canada at the beginning of February, he quickly delayed them by a month. He then did so again at the start of March. But Trump’s insistence that they go into effect in early April threatens to raise prices for US consumers and cut into economic growth.

A recession would likely reduce corporate spending on enterprise software for a period of time, and Trump’s tariffs could cause further foreign governments to retaliate with their own tariffs on US software sales.

The New York Federal Reserve just issued its February Survey of Consumer Expectations, which showed that just 37% of Americans think the stock market will be higher one year from now.

Salesforce stock forecast

Salesforce stock retreated below the important ascending trendline that began in December 2022. Salesforce stock has fallen below the trendline on several occasions on the daily chart but never on the weekly chart. If the current price action holds through Friday, then this will be the first time it does so in 28 months.

What's more, CRM shares opened this week below the trendline, which is currently near $275. The share price sought to retake the trend on Wednesday, pushing back to $285, but that region now appears like resistance on the weekly candlestick.

With the Relative Strength Index (RSI) trending downward but not yet at oversold levels, investors should expect further downward pressure. The primary point of support lies in between $225 and $242. This supportive range is derived from mid-2023 resistance and mid-2024 support. 

CRM daily stock chart