The Dow Jones Industrial Average fell again cautiously on Monday

• The Dow Jones lost 250 points to start the new trading week.
• Stocks retreat on interest rate cut expectations.
• Geopolitical tensions in the Middle East further reduce risk appetite.

The Dow Jones Industrial Average (DJIA) fell around 250 points on Monday in a choppy market as risk appetite waned as interest rate cut expectations faded and tensions in the Middle East turned on the hot side. Markets expect less than 50 basis points in further rate cuts from the Federal Reserve (Fed) for the rest of the year. Crude oil prices are rising as commodity traders brace for a row between Iran and Israel to escalate into full-scale conflict.

Stocks were hit at the start of a new week of trading, weighed down by investors’ dimmed hopes of more Fed rate cuts through the rest of 2024. According to CME’s FedWatch tool, rate traders now expect a chance of about 80 % of a single 25 bps rate cut from the Fed in November. The remaining roughly 20% expect the Fed to accept on November 7.

Markets are bracing for an escalation in the newly erupted conflict between Iran and Israel; Commodity investors are worried that Israel will attack Iran and hit Iran’s crude oil industry, a move that could send global energy prices higher. Iran accounts for about 4% of global crude oil production. Israel is expected to launch some sort of revenge attack against Iran, which launched a missile attack on Israel last week in retaliation for Israel invading neighboring Lebanon.

Dow Jones News

A risk-free Monday affects all stocks, with all but five of the DJIA’s constituents going into the red for the day. Caterpillar ( CAT ) still found room to move higher, gaining eight-tenths of a percent and trading in record territory above $400 a share.

Insurance provider Travelers Companies ( TRV ) outperformed the rest of the Dow Jones losers, falling 3.5% to fall below $228 a share. Despite the hit in the Travelers companies stock, the insurance issuer is doing very well for itself, climbing more than 55% from a late 2019 low of $99.35.

Dow Jones Price Forecast

Price action on the Dow Jones chart suggests a generally bullish sentiment since May, with the index trading consistently above its 50-day exponential moving average (EMA), indicating that near-term momentum remains strong. The 200-day EMA serves as a significant support level, with the index maintaining a comfortable distance from it, reinforcing the underlying strength of the broader uptrend.

However, more recent sessions show a slight pullback. The DJIA is facing resistance around the 42,300 level, which has acted as a psychological barrier since mid-September. The downward price movement from this resistance, combined with a decline in momentum, is something to monitor closely. The MACD histogram has moved into the negative zone, while the MACD line has crossed below the signal line, both of which are bearish signals, suggesting that the short-term momentum may be slowing down.

Dow Jones Daily Chart