Dear traders, dear stock market friends.
The Dow Jones Industrial Average ended the week on Friday with a significant recovery, but remains clearly in the red for the week. After several days of sometimes massive price swings, the index gained around 493 points on Friday to close at around 46,245 points. Nevertheless, a loss of just under 2 % was recorded for the week, similar to the S&P 500, while the technology-heavy Nasdaq 100 even lost 3 %. The renewed turbulence was triggered by subdued sentiment in the AI sector and concerns that the Fed's next interest rate hike in December might not materialize.
Labor market cooled, but not collapsed
On the economic side, the main focus was on the delayed publication of the US labor market report for September. The report was postponed due to the government shutdown. Attention was correspondingly high:
- The US economy created 119,000 new jobs, more than most economists had expected.
- At the same time, revisions to older data indicate that the labor market has been somewhat weaker in recent months than initially assumed.
This results in a mixed picture:
The labor market has cooled noticeably, but remains robust enough to dampen any immediate fears of recession. It is precisely this „neither“ that makes it difficult for the US Federal Reserve (Fed). It has to decide whether the interest rate cuts already made in 2025 are sufficient or whether an additional step is necessary.
This constellation means for the Dow:
- Cyclical stocks and cyclically sensitive sectors look very closely at every new macro figure.
- The markets are wavering between hopes of a „soft landing“ and concerns that the Fed will remain too restrictive for too long
Central banker Williams signals possible interest rate cut in December
The decisive impetus for the strong recovery on Friday came from John Williams, the President of the New York Fed, one of the most influential voices within the central bank.
In a speech, Williams emphasized that monetary policy is currently „moderately restrictive“ and that he sees „scope for a further adjustment“ of the key interest rate towards a neutral level.
Translated that means:
The Fed is not only not ruling out a further interest rate cut in December, but is indirectly holding out the prospect of one, provided that upcoming data (especially on the labor market) allows this.
As a result, the priced-in probability of an interest rate cut in December rose significantly on the futures markets, from below 40 % to well over 70 %.
This is a clear positive signal for the Dow. At the same time, however, the Fed remains data-dependent. If the next labor market report signals renewed strength or inflation picks up again, sentiment could turn very quickly, as the strong reversals of the past week have shown.
Heavy intraday fluctuations after Nvidia earnings
Thursday in particular will be remembered by many market participants. After strong quarterly figures and an optimistic outlook from Nvidia, the stock markets started with a sharp jump in share prices. The Dow was up over 700 points at times, the Nasdaq over 2.5 %.
However, the mood changed completely as the day progressed:
- Concerns that the Fed might not ease further in December increased.
The initial AI euphoria was replaced by valuation fears. - In the end, the Dow closed around 386 points down: an intraday reversal of over 1,100 points.
These extreme fluctuations are a clear sign of a market that is highly positioned and nervous. Many investors took advantage of the strength in strongly performing tech and AI stocks to take profits and reduce risk.
Dow defends weekly EMA-20
Although the correction in the Dow Jones over the last three weeks has been accompanied by numerous headlines suggesting that we could currently see a sharp slump in the stock market, a look at the weekly chart shows that the Dow has so far only corrected to the weekly EMA-20 and successfully defended it last week.
Particularly after such a strong price rally as we saw between April and the end of October, a correction of a few percent is no cause for concern, at least in chart terms.
Last week, the support zone in the area of the weekly EMA-20 and the daily EMA-100 (blue, see below) at 45,700 - 45,800 points was defended. If this support does not hold this week, a continuation of the correction to 45,000 points is likely. This is an important long-term horizontal support level. In addition, the daily EMA-200 and the daily SMA-200 are currently a few points below this support area.
The chances of the Dow stabilizing here are therefore good. However, should this important support also be broken to the downside, the chart picture would become much gloomier and the risk of further price falls would increase.
Author: Tobias Schmid
Date: 24.11.2025
