The Dow Jones Industrial Average (DJIA) experienced a substantial decline of over 1,000 points on Monday, ultimately closing with an 850-point drop. The index fell below 42,000 amidst escalating concerns about a potential economic downturn and the Trump administration’s inconsistent tariff policies.
On Wednesday, the Consumer Price Index (CPI) data for February is due, with expectations of a slight decline in both headline and core CPI. Headline CPI is projected to ease from 0.5% to 0.3% month-on-month, while annualised CPI is forecast to drop to 2.9% from 3.0%.
Stock Market Performance
Despite the market’s overall bearish trend, some stocks such as Amgen (AMGN) rose by 2.3%. In contrast, technology and banking sectors faced losses, with Goldman Sachs (GS) dropping 6% to $526 per share.
The DJIA has not seen this level since November 2023, marking an 8-week low and a 6.55% decline from its last peak just above 45,000. The DJIA consists of 30 major US stocks, calculated based on stock prices rather than market capitalisation.
Various factors influence the DJIA, including earnings reports, macroeconomic data, interest rates, and inflation metrics. Dow Theory posits that trends can be identified by comparing the DJIA and the Dow Jones Transportation Average.
Investment Strategies
Traders can engage with the DJIA through ETFs, futures contracts, options, or mutual funds. These methods allow investors to speculate or gain exposure to the index as a whole.
We saw the Dow Jones Industrial Average tumble more than 1,000 points on Monday before recovering slightly to end the session 850 points lower. That drop dragged it beneath the 42,000 mark, as worries about a looming economic slowdown mounted. The Trump administration’s shifting stance on tariffs only added to the uncertainty.
Looking ahead, Wednesday’s Consumer Price Index (CPI) report for February will be closely watched. The expectation is that both the headline and core CPI readings will tick downward. Forecasts indicate month-on-month inflation could slow from 0.5% to 0.3%, while the annual figure is anticipated to soften from 3.0% to 2.9%. If the data aligns with expectations, it may ease some pressure on equities, though the broader market mood remains cautious.
Markets struggled across multiple sectors, with technology and banking stocks bearing the brunt. While some companies, such as Amgen, saw gains of more than 2%, the largest banks did not fare as well. Goldman Sachs shed 6%, closing at $526 per share, adding to concerns that financials may experience further selling if economic conditions deteriorate.
With the index sitting at its lowest level since November 2023, it’s clear that the downward move is gaining momentum. The Dow has now fallen 6.55% from its most recent high, just above 45,000, and sits at an eight-week low. Given its structure as a price-weighted index, individual stock moves—especially among high-priced names—can have an outsized impact.
A range of factors continue to influence the direction of the Dow, from corporate earnings reports and macroeconomic data to interest rate policies and inflation figures. Under Dow Theory, a sustained downtrend in both the Industrial Average and the Transportation Average could confirm broader market weakness.
For those trading derivatives, the Dow offers multiple routes for engagement. Whether trading through ETFs, futures contracts, options, or mutual funds, there are different ways to gain exposure or hedge against further declines. As recent market moves have shown, navigating the current environment requires a clear understanding of both external risks and index dynamics.
