Dow Jones Correction in May 2025: Key Drivers

5月5日

Dow Jones Correction in May 2025: Key Drivers

Summary: The Dow Jones Industrial Average (DIA) is under pressure and likely headed for a correction due to the Federal Reserve’s tight monetary policy, trade uncertainty from Trump’s tariffs, and weak economic data.

Key Drivers:

➖ Federal Reserve Policy: At the May 6–7 meeting, the Fed is expected to maintain the 4.25–4.5% interest rate due to persistent inflation (2.7% forecast for 2025) and a robust labor market (+177K jobs in April). This dampens hopes for rate cuts, pressuring stocks.

➖ Trump’s Tariffs: New tariffs raise inflation risks and recession fears, reducing the appeal of Dow Jones constituents like Caterpillar and Walmart.

➖ Weak GDP and Global Volatility: A 0.3% GDP contraction in Q1 2025 and declines in Asian markets (1.6–1.8%) signal global instability.

➖ Technical Indicators: DIA trades below its 200-day moving average (~420 USD), with fewer stocks above this level (down from 76% to 55% since January), indicating market weakness.

➖ Outlook: Analysts (Long Forecast) predict volatility, with a potential drop to 38,958 in May, despite an average forecast of 43,370 by month-end. Historically, corrections occur every 1.88 years, and current conditions (tariffs, inflation, GDP) heighten the likelihood of a 10–15% decline.

Target: My downside target for the Dow Jones is 38,555.00.

Current factors and historical trends strongly suggest a near-term correction.

Idea for S&P 500:

5月5日

トレード稼働中

5月9日

注文をキャンセル

Cancellation of the Dow Jones correction idea. Markets have started to rise. For the next 2 months, the priority is long positions in both the stock market and the cryptocurrency market; unfortunately, the correction I was counting on didn’t happen.