Dow Plummets 1,100 Points Amid Fed’s Hawkish Guidance

19 בדצמ׳ 2024

Market Reacts to Limited Rate Cut Projections and Elevated Economic Uncertainty

Dow Drops 1,100 Points in Turbulent Session After Fed Announcement

Investors rushed to reduce exposure to risk assets on Wednesday after Federal Reserve Chair Jay Powell signaled a shift in the central bank's outlook for 2025.

The Dow Jones Industrial Average plunged over 1,100 points following the Fed’s anticipated 25-basis-point interest rate cut and its updated forward guidance. While the rate cut was expected, the announcement that only two cuts are projected for 2024 rattled investors. Powell’s message marked the end of an extended period of monetary easing, further weighing on market sentiment.

This marked the Dow’s tenth consecutive losing session, a streak not seen since 1974, when the index endured eleven straight losses.

Technical Analysis
The Dow's price dropped more than 4.5% ahead of Powell's speech, maintaining a bearish momentum. Stability below the pivot point of 42,590 suggests further downside potential, while a close above this level could indicate a reversal.

Today, the U.S. GDP release will be a key driver of market movement:

• If the GDP comes in below 2.8%, it may support a bullish move toward 42,770 and possibly 42,900.
  
• If the GDP exceeds 2.8%, bearish momentum could drive the index toward 42,380 or even as low as 41,120.
  
  Key Levels
  Pivot Point: 42,590
  Resistance Levels: 42,770, 42,900, 43,190
  Support Levels: 42,380, 42,150, 41,970
  
  Trend Outlook
  Bullish Momentum: If the price stabilizes above 42,590.
  Bearish Momentum: Likely to persist with stability below 42,590.