Dow Jones Industrial Average rebounds as investors shrug off overnight losses

The Dow Jones Industrial Average (DJIA) slipped into the 44,000 range during Monday’s early session, pressured by a mix of global and domestic concerns. Investor sentiment soured after a Chinese AI lab released its open-source DeepSeek-R1 model, challenging the dominance of US-based proprietary AI solutions and raising questions about the effectiveness of US trade barriers on Chinese tech advancements. Adding to the bearish mood, a political spat between US President Donald Trump and Colombia escalated over the weekend, with Trump threatening a 50% tariff on Colombian imports due to a disagreement on migrant returns.

Despite early losses, the DJIA found support during the US trading session as investors turned their attention to potential Federal Reserve (Fed) rate cuts. While the Fed is expected to hold rates steady at this week’s policy meeting, traders have increased bets on a 50-basis-point rate cut for 2025, according to the CME’s FedWatch Tool, up from last week’s expectations of 25 bps.

Tech stocks remained a drag on the index, with Nvidia (NVDA) plunging 13% as the release of DeepSeek-R1 raised concerns over its dominance in the AI space and the sustainability of its market position. The DJIA managed to recover to the 44,400 range by midday, buoyed by gains in other sectors and overall rate cut optimism.

Dow Jones Outlook

The Dow Jones continues to trade off November’s record highs above 45,000 but shows resilience after rebounding from a swing low near 41,700 earlier this month. Buyers are defending the 44,000 level, with the index maintaining a generally bullish trajectory, having closed in the green for eight of the last ten sessions. A climb back toward 44,800 could set the stage for retesting recent highs, while support at 43,700 remains a key level to watch for any downside risks.

Dow Jones daily chart