- The Dow Jones plunged during the overnight session before Monday’s opening bell.
- Fears of a trade war are back on the table after Trump clashes politically with Colombia.
- Fresh hopes for rate cuts are lifting stocks from early-week lows.
The Dow Jones Industrial Average (DJIA) fell to the 44,000 area during the early overnight session on Monday, driven lower by a new episode of deterioration in investors’ risk appetite after a Chinese company launched globally an open source competitor to US-based AI models that have until now been largely proprietary. Investor sentiment was further affected by a political dispute between United States (US) President Donald Trump and Colombia over the weekend, after a disagreement between the two countries over the return of Colombian migrants from the US, which led President Trump to lose his cool and threaten a 50% tariff on all goods imported to the US from Colombia.
Stocks rallied in the early hours of the US market session as investors’ focus turned to hopes of rate cuts by the Federal Reserve (Fed). The Fed is expected to deliver its latest rate decision later this week, and while the US central bank is widely expected to keep rates unchanged for now, traders are increasing their bets on further rate cuts. rates in 2025. According to the CME’s FedWatch tool, rates markets are pricing in a total of 50 basis points of rate cuts over the rest of the year, up from bets of 25 basis points last week.
The tech sector was shaken after a Chinese artificial intelligence lab released its DeepSeek-R1 AI model, making it open source and proving that anyone can develop a high-performance AI model without a huge investment in produced silicon and microchips. in the US, something that US trade barriers were explicitly instituted to keep out of the hands of the Chinese. With DeepSeek causing a stir in the AI ​​space, investors are questioning the point of maintaining silicon trade barriers with China and investors who have invested in US technology companies that provide chip solutions for AI projects are getting nervous.
Dow Jones News
Despite struggling to cut losses and return to Friday’s closing bids, most stocks listed on the Dow Jones are on the rise during Monday’s US trading session. However, losses are largely contained within key tech favorites, keeping the DJIA unbalanced. Nvidia (NVDA) is taking a hit on Monday, falling about 13% on the day and testing below $125 per share, with the silicon maker’s dominance in the AI ​​space being threatened by up-and-coming newcomer Chinese DeepSeek has arrived, hinting that Nvidia’s market dominance may not last forever, or even for the rest of the year.
Dow Jones Price Forecast
The Dow Jones began the new trading week with a retest of the 44,000 area, but the index’s early pivot to the bearish side is facing fresh momentum from buyers, and has risen back to the 44,400 range. Despite the short-term declines, the main stock index remains firmly tilted to the bullish side, closing in the green on all but two of the last ten consecutive trading days.
The Dow Jones continues to trade on the wrong side of all-time highs above 45,000 recorded last November. Still, equity traders are pushing stocks back up the same old hill as the DJIA rises from the last major low in the 41,700 region.
Dow Jones Daily Chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the world’s oldest stock indices, is made up of the 30 most traded securities in the United States. The index is weighted by price rather than capitalization. It is calculated by adding the prices of the securities that comprise it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader indices such as the S& P 500.
There are many factors that drive the Dow Jones Industrial Average (DJIA). The main one is the aggregate performance of its component companies, revealed in quarterly corporate earnings reports. US and global macroeconomic data also contribute, influencing investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA, as it affects the cost of credit, on which many companies largely depend. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
The Dow Theory is a method for identifying the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. The Dow theory proposes three phases of the trend: accumulation, when the smart money begins to buy or sell; public participation, when the general public joins the trend; and distribution, when the smart money abandons the trend.
There are several ways to trade the DJIA. One of them is to use ETFs that allow investors to trade the DJIA as a single security, instead of having to buy shares of the 30 companies that comprise it. A prominent example is the SPDR Dow Jones Industrial Average ETF (DIA). Futures contracts on the DJIA allow traders to speculate on the future value of the index, and options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds allow investors to purchase a portion of a diversified portfolio of DJIA securities, providing exposure to the global index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
