The Dow Jones Industrial Average remained in a tight range near its all-time high of $49,705 as traders awaited the Federal Reserve’s first interest rate decision of the year and earnings from the Magnificent 7.
Summary
- The Dow Jones Index has formed a rising wedge pattern on the daily chart
- The Federal Reserve will issue its first interest rate decision of the year on Wednesday.
- Many companies, including those in the Magnificent 7, will publish their figures.
The Dow Jones, which tracks 30 top blue-chip companies, was trading at $49,160, up 35% from its lowest level in 2025, but below 0.6% for the week.
The index is likely to see high volatility next week when the Federal Reserve makes its first interest rate decision of the year. Economists polled by Reuters expect the bank to leave interest rates unchanged at between 3.5% and 3.75%.
This interest rate decision will provide more information about what to expect in upcoming meetings, as officials received more data after the last meeting in December. A report released this week showed that the US GDP expanded 4.4% in the third quarter, higher than the previous estimate of 4.3%.
More data released this month showed that the headline consumer price index rose to 2.6% in December, while the core CPI stood at 2.7%. Another report showed the unemployment rate improved to 4.4% in December.
The Dow Jones index will also react to key corporate earnings from the so-called Magnificent 7: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla.
All of these companies, valued at more than $16 trillion, will be closely watched. After all, they are the biggest spenders in the AI industry, which has helped drive the stock market to a record high. Strong financial results are likely to push the index higher.
The other major Dow Jones components set to report earnings are Caterpillar, Boeing, UnitedHealth, Chevron and IBM.
Technical analysis of the Dow Jones index
The daily chart shows that the Dow Jones index has remained in a tight range in recent weeks. A closer look shows that the index has formed a rising wedge pattern, with the two lines approaching their confluence.
The index has also formed a bearish divergence pattern, as the Relative Strength Index and MACD have continued to decline in recent months.
Therefore, the index is likely to pull back, potentially to the psychological level of $48,000 and then rebound. This agrees with Tom Lee’s recent prediction. The Bitmine chair wait The stock market may drop 10% to 20% before recovering.
Broader look
US stocks were mixed on Friday as the Nasdaq rose 0.3%, extending gains as geopolitical fears eased, while the S&P 500 fell 0.1% and the Dow fell 0.8%, dragged down by a 3% drop in Goldman Sachs.
Markets rallied earlier in the week after President Trump dropped his threats to impose tariffs on eight European nations and signaled progress toward a framework agreement involving Greenland, fueling what investors called the “TACO” trade, a belief that aggressive rhetoric can give way to negotiation.
The S&P 500 and Nasdaq are on track for a second consecutive weekly decline.
