• Dow Jones kicks off the new trading week with overcorrection in both directions.
• US data missed the mark on Monday, sparking a brief rally on rate cut hopes.
• Too-big of a dip in US data, plus a muddy election outlook, reignites recession fears.

The Dow Jones Industrial Average (DJIA) briefly rallied on Monday after a broad miss in key US data sparked a risk rally on renewed rate cut hopes. Still, the steep decline in manufacturing figures proved too much for investors to stomach. Equities gave up early gains and tumbled back into the day’s opening range.

June’s US ISM Manufacturing Purchasing Managers Index (PMI) broadly missed the mark on Monday, ticking down to 48.5 from the previous 48.7 and missing the forecast step up to 49.1. The economic indicator has spent a third consecutive month below the key 50.0 level, flashing ongoing warning signs of a broader slowdown creeping up within the US domestic economy.

ISM Manufacturing Prices Paid also declined in June, tumbling to a six-month low of 52.1 from the previous 57.0, falling well below the forecast decline to 55.9. With inflationary pressures easing, US markets initially jumped at the outset of the new trading week as investors continue to hope for softening economic figures to push the Federal Reserve (Fed) into an accelerated pace of rate cuts. However, too-steep of a drag in US data points could easily tip the US into a recession that rate cuts won’t overcome, sparking risk-off fears and trimming Monday’s early gains.