The Dow Jones Industrial Average (DJIA) fell about 257 points, or 0.6%, on Friday, as all three major U.S. indexes posted their fourth straight week of declines. The S&P 500 fell 0.8%, while the Nasdaq Composite underperformed with a decline of 1.2%. Nightly strikes between Iran and Israel, novel attacks on power plants in the Persian Gulf, and the Wall Street Journal’s report that the Pentagon was deploying thousands of additional Marines to the Middle East were all mood-driven. Volatility was amplified by a quarterly quadruple witching event that saw trillions of dollars worth of options and futures contracts expire, causing higher volumes and sharper intraday swings. Rising Treasury yields added additional pressure as fears grew that inflation would heat up again and Fed rate cuts were off the table.
Dow Posts Worst Week Since 2022
The hourly chart clearly shows this situation. The Dow peaked near 47,400 earlier in the week before the FOMC’s decision sent it down about 1,700 points on Thursday to a weekly low near 45,700 – the index’s lowest level this year. The Dow strengthened on Tuesday, but suffered a 768-point loss on Wednesday amid the FOMC’s decision and hotter-than-expected inflation data. There was a partial recovery on Thursday as oil prices rebounded from session highs after Israeli Prime Minister Benjamin Netanyahu said Israel was helping the United States reopen the Strait of Hormuz, but the rebound faded and selling resumed on Friday. The price is currently trading well below the rapidly falling 50-period exponential moving average and 200-period exponential moving average near 47,200, confirming the downtrend. The Stochastic RSI has rebounded towards 72 after deep oversold conditions, but with this type of upper resistance, the rebound appears circumscribed. For the week, the Dow fell about 1.5%, the S&P 500 lost about 0.9% and the Nasdaq lost about 0.8%. Both the Dow and Nasdaq are currently approaching correction territory, remaining 8.6% and over 8% respectively below their all-time closing highs. Deutsche Bank’s Jim Reid noted that Friday was the 15th trading day of the conflict, which historically represents the average point at which U.S. stocks bottom out after a geopolitical shock. However, he cautioned that given the level of uncertainty, headlines will matter more than history. On the other hand, Unlimited CEO Bob Elliott argued that the market remains overly bullish about the impact of the war on wages and the economy, noting that households would actually see a decline of 1% to 2% in real purchasing power even if the conflict were to be resolved immediately.
The war in Iran is keeping oil high and energy stocks outperforming
The Iran conflict remained the dominant macro topic throughout the week. Brent crude briefly rose to $120 on Thursday after strikes on energy infrastructure in Iran and Qatar shook an already tense market. The rally died down after Netanyahu’s comments about reopening the Strait, and crude oil retreated on Friday after The Wall Street Journal reported that U.S. warplanes and helicopters had begun operations to clear the critical shipping lane. Both West Texas Intermediate and Brent were flat on Friday, but have remained above 40% since the war began in overdue February. Baird investment strategist Ross Mayfield warned that if the escalation involves troops on the ground, markets could face further weeks amid elevated oil prices and volatility due to headline news, adding that stocks have yet to sell off in a way that fully reflects the severity of the situation. Chevron ( CVX ) was one of the few radiant spots in the Dow this week, gaining more than 1% on Thursday after HSBC upgraded the company’s shares to a buy rating, citing the company’s relatively low exposure to the Middle East. Liquefied natural gas companies such as Venture Global (VG) and Cheniere Energy (LNG) posted double-digit weekly gains as European gas prices remained high near four-year highs.
Hawkish keeping the Fed changes interest rate expectations
Wednesday’s FOMC meeting turned out to be the biggest catalyst of the week for stocks. As expected, the Fed kept interest rates at 3.50-3.75%, but Chairman Jerome Powell’s comments spooked investors. Powell noted that inflation has not fallen as much as the central bank had hoped and acknowledged that short-term inflation expectations have risen along with oil prices. The updated scatter plot showed that the median FOMC member now expects only a single 25-basis-point rate cut in 2026, compared with earlier forecasts of multiple cuts. The CME FedWatch Tool reflected the hawkish change. Following this decision, the likelihood of interest rates remaining unchanged until the June meeting increased to around 89%, up from 63% a week earlier. Moreover, the tool now shows a more than likely chance that rates will remain at their current levels until the end of the year, with around a 12% chance of a rise currently included. Producer Price Index (PPI) data released on the same day added to the pressure, which was higher than expected for the second month in a row.
Dollar companies like gold and silver are experiencing a brutal sell-off
The Fed’s hawkish sell-off strengthened the US dollar, which appreciated sharply in the middle of the week. The dollar index (DXY) rose to a weekly high above 100.50 on Wednesday before recovering to 99.00 on Thursday as risk sentiment improved briefly. By Friday, the DXY index had recovered to trade around 99.60, settling right on its 200-period exponential moving average, and the stochastic RSI was heading toward the overbought area near 74. A stronger dollar and rising Treasury yields combined to crush precious metals. On Wednesday, gold broke below the psychologically critical level of $5,000, and by Thursday it extended its decline to $4,650, the lowest price since early February. Silver suffered even more, with futures losing over 8% in one session. Contributing to the sell-off was the emptying of leveraged positions as the narrative of higher and longer interest rates persisted. Mining stocks were hardest hit, with Newmont ( NEM ) down about 7.5% and Alcoa ( AA ) down more than 8% on Thursday. The price of gold rose slightly on Friday but remains on track for its worst week since 2020.
FedEx rises after earnings beat, Micron falls despite feeble quarter
FedEx (FDX) was the standout performer in the corporate market, rising about 9% in pre-open trading on Friday after crushing fiscal third-quarter estimates. The logistics giant reported adjusted earnings per share of $5.25 on revenue of $24 billion, well ahead of expectations of $4.09 billion and $23.4 billion, respectively. The company also raised its full-year fiscal 2026 adjusted earnings per share guidance to a range of $19.30 to $20.10, with the low above consensus. CEO Raj Subramaniam credited the company’s Network 2.0 restructuring initiative for improving efficiency. Elsewhere, Micron ( MU ) fell about 4% on Thursday despite posting sturdy second-quarter financial results that nearly tripled revenue. Investors focused on the company’s plans for high capital spending rather than on good demand prospects. Super Micro Computer (SMCI) dropped 25% after employees were accused of smuggling Nvidia chips into China. Planet Labs (PL) bucked the trend, rising 20% ​​in early Friday trading on sturdy results and bullish guidance.
Dow Jones 1-hour chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock indexes in the world, consists of the 30 stocks most frequently traded in the United States. The index is price-weighted, not capitalization-weighted. It is calculated by summing the prices of the company’s shares and dividing them by the coefficient, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years, it was criticized for not being representative enough because it only tracks 30 conglomerates, as opposed to broader indexes such as the S&P 500.
Many different factors influence the Dow Jones Industrial Average (DJIA). The most vital are the total results of the companies included in the group, disclosed in quarterly reports on the companies’ results. Macroeconomic data from the United States and around the world also matters because it influences investor sentiment. The level of interest rates set by the Federal Reserve (Fed) also affects the DJIA because it influences the cost of borrowing, on which many corporations depend heavily. Therefore, inflation may be a major factor, along with other indicators, that influence Fed decisions.
Dow Theory is a method of identifying the main trend in 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 track trends where both are heading in the same direction. Volume is a confirmatory criterion. The theory uses elements of peak and trough analysis. Dow Theory assumes three phases of a trend: accumulation, when astute money starts buying or selling; public participation when wider society is involved; and distribution when the astute money comes out.
There are many ways to trade the DJIA. One is the apply of ETFs, which allow investors to trade the DJIA as a single security rather than buying shares of all 30 companies that comprise it. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts allow investors 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 stocks, thereby providing exposure to the entire index.
