The Dow Jones Index showed signs of weakness on Friday as corporate earnings results started streaming in. The Index closed the week at -0.3% , disrupting an otherwise strong run that saw it gain 2.7% on the weekly chart. Multiple corporations will this week release their earnings figures for the last three months of 2024. That will inject fresh volatility into the markets.
Companies in the Dow Jones Index (INDEXDJX: .DJI) lined up for earnings release include IBM, Apple, Microsoft, Amazon, Visa and Caterpillar. The earnings results will impact the broader market sentiment, as the corporate world readies itself to deal with potential tariff disruptions under the Donald Trump administration.
The Dow Jones Index underperformance on Friday was exemplified by the fact that only two stocks, Walt Disney (NYSE: DIS) and Walmart (NYSE: WMT) recorded gains of one percent or more.
However, the strongest case for the Dow Jones’ downside is the disruption triggered in the tech market by Chinese startup, DeepSeek. The company has launched an open source Large Language Model (LLM) AI training solution that performs almost at par with the more expensive models by leading American companies while requiring a fraction of their computing power. The news caught traction over the weekend and sent multiple stocks, including market leader, Nvidia, down by more than 10% in the pre-market session.
Elsewhere, the Federal Open Market Committee (FOMC) will meet this week, with the Federal Reserve set to make its interest rate decision on Wednesday. The Fed is expected to retain interest rates at 4.5% as inflation remains sticky. Personal Consumption Expenditure (PCE) data will be out later on Friday, and will give a clearer picture of the inflation trajectory. Analysts expect just two interest rate cuts in 2025, with the first one potentially coming in the first quarter.
Dow Jones Index Forecast
The Dow Jones Index pivots at 44,440 points and an extended resistance at that point will signal control by the sellers. Immediate support is likely to be at 44,326, but a stronger downward momentum will break below that level and potentially test the 44,223 points mark.
On the other hand, moving above 44,440 points will signal a shift by the momentum to the upside. In that case, the Index is likely to move higher and encounter the first resistance at 44,510. Breaking above that level will invalidate the downside narrative. In addition, such momentum could potentially take the index to test the second barrier at 44,600.
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