Dow Jones Industrial Average declines as geopolitical fears simmer

The Dow Jones fell 300 points or 0.7%, while the S&P 500 shed 60, falling nearly 1.1%.
US equities are back to their bearish ways as trade war fears continue to weigh.
The Fed’s latest rate call is in the barrel for Wednesday.

The Dow Jones Industrial Average (DJIA) pulled back around 300 points on Wednesday, snapping a two-day win streak and pushing back into the low side as equities remain unable to find a consistent reason to pivot confidently out of a recent downturn sparked by ongoing geopolitical turmoil pouring out of the White House since Donald Trump took office as President in January.

Both the Dow Jones and the Standard and Poor’s 500 (S&P) are back into the red on Tuesday. The Dow eased back below the 42,000 level, and the S&P 500 continues to toy with the 5,600 handle. Both major equity indexes are testing correction territory, down around 8% from record highs.

The Trump team’s plans for further tariffs slated to come into effect on April 2nd are once again shifting. President Donald Trump has asked his Treasury Secretary Scott Bessent to “rethink” the US sanctions regime. Fresh tariff talk has knocked the latest bull run flat on its back, despite Treasury Secretary Bessent hinting that tariffs may not be as across-the-board as originally envisioned. Given the Trump administration’s general anathema for consistent policy disclosure, this will hardly come as a surprise to markets that have grown accustomed to near-constant waffling, capitulation, and last-minute changes to the majority of team Trump’s trade policy proposals over the past eight weeks.

The Federal Reserve’s (Fed) latest rate call is due on Wednesday. According to the CME’s FedWatch Tool, rate markets broadly anticipate the Fed to stand pat on rates for the next two meetings, with the next quarter-point rate trim expected at the Federal Open Market Committee’s (FOMC) June meeting. However, the FOMC’s latest interest rate forecasts will be released this week. They could send rate cut expectations through the wringer if Fed policymaker’s expectations for interest rates deviate wildly from current market forecasts.

Stocks news

Stock sectors are red across the board on Tuesday as investors struggle to find a place to hide. Despite announcing a partnership to help develop processes to produce a fleet of self-driving cars, Nvidia (NVDA) and General Motors (GM) are both falling back. Nvidia is down 2.5% near $116 per share and GM is down around 1%, testing below $50 per share as it gets more difficult to spark buying interest in investors simply by announcing more AI projects.

Dow Jones price forecast

With a fresh bearish daily candlestick, the Dow Jones is at risk of chalking in a technical rejection from the 200-day Exponential Moving Average (EMA) near the 42,000 major price handle. Buyers are suddenly running out of time to push bids back into the high end.

Dow Jones daily chart

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).