The Dow Jones Industrial Average (DJIA) experienced a sharp decline on Tuesday, plunging 700 points at its lowest point before recovering slightly, ultimately settling down by around 650 points. Investor sentiment took a hit after U.S. President Donald Trump imposed a hefty 25% tariff on all imported goods from Canada and Mexico, as well as an additional 10% tax on Chinese imports, raising China’s tariff total to 20%. This marked the beginning of what many are viewing as Trump’s larger, intensified global trade war.
Further tariff proposals are reportedly in the works, targeting a range of goods, including aluminum, steel, agricultural products, foreign cars, copper, and lumber. As a result, markets are reacting nervously, with traders pricing in an estimated 100 basis points (bps) of interest rate cuts by the end of the year, with the first quarter-point rate reduction expected as soon as June. Economic data due later in the week, including ADP Employment Change figures on Wednesday and Nonfarm Payrolls on Friday, will be closely scrutinized as investors brace for potential negative impacts from the sweeping tariffs.
Dow Jones Stock Performance
On Tuesday, the majority of stocks listed on the Dow Jones were in the red, though there were modest gains from UnitedHealth (UNH) and Nvidia (NVDA), which rose by 1.8% and 1.1%, respectively. UNH is now trading above $475 per share, while Nvidia hovers around $115.
Meanwhile, Boeing (BA) saw a sharp 5.5% drop to $160 per share, while American Express (AXP) and 3M (MMM) both fell about 4.5%, to $281 and $146 per share, respectively. Key losses were particularly pronounced in the financial sector as tariffs continue to weigh heavily on market sentiment.
Dow Jones Technical Outlook
The sharp decline on Tuesday puts the Dow Jones Industrial Average on track to approach its 200-day Exponential Moving Average (EMA) at 42,060, a level it hasn’t reached since November 2023. Over the course of two days, the Dow has shed nearly 1,700 points, a drop of 3.8%.
With bearish momentum dominating the near-term outlook, the 42,000 level could serve as a significant point of resistance to further declines. However, technical indicators are now in oversold territory, potentially signaling an opportunity for a bullish rebound if buyers regain control of the market in the coming sessions.
