The Dow Jones Industrial Average retreated sharply this week, forming an alarming technical pattern as geopolitical risks and tariff uncertainties weighed on investor sentiment ahead of key earnings reports from major constituents like NVIDIA and Salesforce.
The blue-chip index was trading at $48,805, down over 3.3% from its all-time high of $50,560 reached earlier this year. Other major indices, including the S&P 500 and Nasdaq 100, also fell by over 1%. The selloff culminated in a brutal Monday session where the Dow plunged 821.91 points, the S&P 500 dropped 1% to 6,837.75, and the Nasdaq lost 1.1%.
Three primary pressures are driving the market volatility. First, escalating geopolitical tensions, particularly the rising possibility of a U.S. military strike on Iran following warnings from President Donald Trump, threaten to spike oil prices and create broader market instability. Second, new U.S. tariff policies have introduced significant uncertainty. A broad 10% tariff on most global imports took effect, with the White House considering additional "national security" tariffs on sectors like large batteries and telecommunications equipment.
Third, investors are grappling with a new wave of AI-related anxiety, fearing that rapid advances in artificial intelligence could disrupt established software business models faster than they can adapt. This has put a spotlight on upcoming earnings, particularly from NVIDIA, which is viewed as a key test for the AI trade's sustainability.
From a technical perspective, the Dow Jones has formed a bearish rising wedge pattern on its daily chart, confirmed by a break below the pattern's lower trendline. Key momentum indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have also turned downward, suggesting a risk of further decline toward the $48,000 level.
All eyes are now on Wednesday's earnings reports. NVIDIA, the Dow's biggest constituent, is expected to report strong Q4 results with revenue estimates surpassing $66 billion, driven by soaring demand for its GPUs. Meanwhile, Salesforce stock, which has tumbled over 50% from its peak, faces investor concerns about potential disruption from AI tools developed by companies like Anthropic and OpenAI.
The broader market tone remains fragile. Despite a slight rebound early Tuesday—with the Dow advancing 339 points—the calm is seen as a pause rather than a definitive recovery. Investors are treading carefully, awaiting clarity on both trade policy and whether AI leaders can deliver on sky-high expectations.
