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The Dow Jones Index retreated sharply this week as geopolitical risks rose ahead of key earnings by companies like NVIDIA and Salesforce.
Summary
- The Dow Jones Index has formed an alarming rising wedge on the daily chart.
- Market risks, including on Iran and tariffs, have continued rising.
- NVIDIA and Salesforce will publish their financial results on Wednesday.
The blue-chip Dow Jones was trading at $48,805, down by over 3.3% from its all-time high. Other top indices like the S&P 500 and Nasdaq 100 also dropped by over 1%.
Salesforce and NVIDIA to publish earnings this week
The Dow Jones retreated as market participants positioned to major risks. One key risk is the rising possibility that the US will strike Iran as soon as this week.
The risk of an attack rose after President Donald Trump warned that he may launch a limited attack on Iran, a move that would lead to an escalation. Such an escalation would then lead to higher oil prices and market volatility.
Market participants are also worried about Trump’s tariffs. New tariffs based on Section went into effect on Tuesday as the administration worked on more long-lasting ones.
The Dow Jones Index also retreated as Jamie Dimon warned of a 2008-like Global Financial Crisis. In a statement, he said:
“Unfortunately, we did see this in ’05, ’06 and ’07, almost the same thing — the rising tide was lifting all boats, everyone was making a lot of money. I see a couple of people doing some dumb things. They’re just doing dumb things to create NII.”
Looking ahead, the next key catalyst for the Dow Jones Index is the upcoming Salesforce and NVIDIA earnings, which will come out on Wednesday this week.
NVIDIA, the biggest constituent, is expected to report strong results and forward guidance as demand for GPUs jumped. The average estimate among analysts is that its revenue rose to over $66 billion in the fourth quarter.
Salesforce stock will be in the spotlight as it has tumbled by over 50% from its all-time high. It has dropped as investors remain concerned about the potential disruption by new AI tools by companies like Anthropic and OpenAI.
Dow Jones Index technical analysis
Dow Jones Index chart | Source: TradingViewThe daily chart shows that the Dow Jones Index reached a record high of $50,560 earlier this year. It has now pulled back to $48,805 as market risks escalate.
A closer look shows that the index has formed a rising wedge pattern, which is made up of two ascending and converging trendlines. It has already moved below the lower side, confirming the bearish outlook.
The index also formed a rising wedge pattern as the Relative Strength Index and the MACD indicators moved downwards as it rose.
Therefore, there is a risk that it may keep falling, potentially to the key target at $48,000.
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