Dow Jones Index At Crossroads After Trump Rally. Where Next?

Summary:
• The Dow Jones Index is still digesting the implications of a Donald Trump presidency, and the latest Fed Interest rate cut has little impact.

The Dow Jones Index flattened on Thursday as investors weighed the implications of a Donald Trump presidency and Fed interest rate cut. The Fed slashed interest rates by 25 basis points on Thursday, which matched the prevailing market expectations. However, it lacked the impetus brought by the previous 50 basis points cut in September, and traders will now have to weigh pronouncements by Trump in the coming weeks.

The Dow Jones Index rally in the last two days puts it in a precarious position, in view of the market’s indifference toward the Fed interest rate decision. The hype surrounding Donald Trump’s win is unlikely to sustain the upside next week.

Fed interest rates will now rage between 4.50%-4.75% , with the central bank’s Chairman Jerome Powell giving an upbeat outlook on the economy in 2025. According to Powell, the economy will likely grow at a faster rate than previously projected. However, the change of power at the White House will also weigh in on the projections.

Donald Trump’s economic policies are set to usher in looser regulations, with lower corporation taxes a central factor in his campaign. However, his planned tariff hikes on imports, especially from China, could be counter-productive, as the affected countries will likely retaliate. Meanwhile, the Dow Jones Index said goodbye to Intel Corporation (NASDAQ: INTC) and welcome the AI industry’s market leader, Nvidia on Friday.

Except Home Depot (+1 percent), none of the Dow Jones Index (INDEXDJX: .DJI) stocks had gains or losses exceeding 1 percent during Friday’s pre-market session. UnitedHealth was unchanged, Microsoft was at-0.25 percent, Caterpillar was down by -0.83 percent at the time of writing, signaling weak momentum.

Dow Jones Index prediction

The Dow Jones Index pivots at 43,630, and action above that level will favour the buyers to be in control. With the buyers in control, the first hurdle is likely to be at 43,832. However, a stronger bullish momentum could break above that level and test 44,039.

Conversely, moving below 43,630 will put the sellers in control. In that case, the first support is likely to be at 43,391. However, if the downward momentum strengthens, the Index could go below the first support. The upside narrative will be invalid at that point, with the decline potentially testing the second support at 43,217.