Dow Jones Index futures pulled back on Monday, continuing a weakness that started on Friday. It retreated by over 300 points and moved below the key support level at $49,000. It has now dropped by nearly 2% from its highest point this year. This article looks at some of the top catalysts for the index this week.

Dow Jones Index to react to new US-Europe trade conflict

The Dow Jones Index futures pulled back on Monday as investors reacted to the new tariff war between the United States of America and the European Union.

The new conflict started on Saturday when Donald Trump warned that some European countries, like Germany and France would pay an additional 10% tariff for their support of Denmark and Greenland.

This tariff will rise to 10% on February 1, and then move to 25% until the United States completes its purchase of Greenland, a semi-autonomous region controlled by Denmark.

The European Union is considering adding tariffs worth €93 billion of its own in response to Trump’s threats, a move that will lead to a downward spiral, with Trump expected to boost his figure in case of retaliation.

Additionally, France has asked the bloc to hit the United States with its anti-coercive rules, which have never been used before. The rules include investment restrictions, which can throttle services offered by the biggest American companies like Microsoft and Meta Platforms.

On the positive side, Trump’s is set to meet with some senior European leaders at the World Economic Forum, where the two sides may announce a deal.

World Economic Forum in Davos 

The other important catalyst for the Dow Jones Index this week will be the World Economic Forum in Davos, Switzerland. This is an annual event that brings together top leaders in government and corporations to discuss key issues.

The keynote speaker in this event will be Trump, who has pledged to announce major policies, including on housing. Specifically, Trump said that he would bar institutional investors from buying residential houses, as he focuses on the affordability issue. He will also talk about his efforts to lower credit card interest rate.

The Dow Jones Index will also react to statements from other leaders in this summit this week.

Corporate earnings in the spotlight 

The Dow Jones Index will also react to the ongoing earnings season that will see hundreds of companies in the United States publish their numbers.

Netflix will be the key company to watch this week when it publishes its report, as investors will have a chance to hear the management’s view on the ongoing Warner Bros buyout.  

More American companies like GE Aerospace, Johnson & Johnson, 3M, Truist, Kinder Morgan, Intel, and Procter & Gamble will be the top companies to watch this week.

SCOTUS decision on Donald Trump’s tariffs 

The other major Dow Jones Index news this week will come out on Tuesday when the Supreme Court releases the ruling on Donald Trump’s tariffs.

Analysts have a mixed opinion on what to expect from the bank, with some of them expecting the court to end the tariffs. A Polymarket poll also expects that the court will do that, a move that would benefit American companies  

Still, the cheer would be short-lived as Trump will have other tools to implement tariffs.

The Dow Jones Index will also react to other macro data from the US, including the upcoming US inflation report and the flash manufacturing and services PMI numbers.

Dow Jones Index technical analysis

Dow Jones chart | Source: TradingView

The daily chart shows that the Dow Jones Index has rebounded in the past few months. It has soared from a low of $36,700 in April last year to a high of $49,855 this year. 

The index has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It has also formed an inverse head-and-shoulders pattern whose neckline is the ascending trendline that connects the highest swings since July last year.

Therefore, the most likely scenario is where it rebounds later this year, with the next target being $50,000.

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