Dow Jones Industrial Average rockets higher on tariff suspension
- The Dow Jones soared 7% on Wednesday after the Trump administration delayed its lopsided “reciprocal” tariffs.
- A flat 10% across-the-board tariff is still in effect, and China tariffs are still going to 125%.
- Market sentiment has entirely reversed course, and rate cut bets are plummeting.
The Dow Jones Industrial Average (DJIA) skyrocketed on Wednesday, climbing over 2,200 points and reclaiming the 40,000 major price handle after the Trump administration announced it would once again pivot away from most of its recent tariff threats. According to social media posts by US President Donald Trump, lopsided “reciprocal” tariffs are being reduced to just 10% across the board for the next 90 days
US tariffs on China are still in effect, however, and are set to rise to 125% after China slapped a counter-retaliatory tariff of 84% on all goods imported from the US in a move that almost exclusively targets US agriculture. The US’s last-minute tariff pivot comes just after the European Union (EU) also approved its own retaliatory tariff package that would have seen a 25% import duty imposed on US goods.
Trump announces a 90-day pause on reciprocal tariffs
The Dow Jones soared over 10% bottom-to-top on Wednesday, rising 3,740 at its peak before settling to a more reasonable 6.2% single-day rebound. The Standard & Poor’s 500 (S&P) index rallied 375 points to climb 7.5%, while the Nasdaq Composite rose 1,400 points, netting 9.4% on Wednesday.
Read more stock news: NASDAQ spikes 10% after Trump pauses tariffs for 90 days
Rate cut bets are getting pummeled by the tariff delay news, and rate traders now expect far fewer rate cuts through the rest of 2025. According to the CME’s FedWatch Tool, interest rate swap traders now expect a total of 75 bps in interest rate cuts through the remainder of the year. A first Fed rate cut is still expected at the Fed’s June rate call meeting, but a first rate cut in July remains a firmer bet.
Dow Jones price forecast
Intraday price action has been decimated by more late-stage tariff policy pivots from the Trump administration, and the Dow Jones has gone from 37,000 to 40,000 within a single trading session. Significant technical resistance remains at the 200-day Exponential Moving Average (EMA) near 41,900, however bidders will first need to crack through a soft resistance zone from March’s swing low into 41,000.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of 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 follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders 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 enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
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