Dear traders, dear stock market friends.
The Dow Jones Industrial Average continued its correction in the past trading week and closed weaker for the third week in a row. It was not only the war in the Middle East that caused nervousness to rise further; macroeconomic factors also provided an increasing headwind.
The most important macro factors behind the Dow's weakness
In addition to the ongoing uncertainty caused by the war in Iran, the Dow Jones had to contend with further negative news at the macro level last week. US growth was revised downwards, while core inflation remained at too high a level, dampening hopes of rapid interest rate cuts. At the same time, rising Treasury yields and a firmer US dollar exacerbated the pressure on equities.
GDP revision to 0.7 %: Growth loses momentum
One of the main negative factors at the end of the week was the significant downward revision of US GDP for the fourth quarter of 2025. Growth was lowered to an annualized 0.7 % in the second estimate, after 1.4 % had previously been reported. Compared to the previous quarter with growth of 4.4 %, this is a clear indication that economic momentum had already slowed noticeably before the recent oil price shock. 
This is particularly relevant for the Dow Jones because the index is more heavily influenced by traditional economic and value sectors than other major US indices. When growth cools, industrial, financial and cyclical consumer stocks come under pressure more quickly. This is exactly what we saw last week: The market began to react not only to geopolitical headlines, but also to price in a weaker underlying economic trend at the same time. 
In addition, the GDP data cannot be viewed in isolation. The downward revision signals that the US economy is more vulnerable going into this new phase of higher energy prices than many market participants had expected just a few weeks ago. If there is no rapid de-escalation in the coming weeks, there is a serious risk that the geopolitical crisis could quickly become a macroeconomic problem for the stock market.
Core PCE remains high: Why the inflation problem has not been solved
Parallel to the weaker growth momentum, the inflation side did not provide any relief either. The PCE price index, which is particularly important for the Fed, rose by 0.3 % in January compared to the previous month, while the core rate excluding energy and food rose by 0.4 %. For the year as a whole, the overall PCE was 2.8 %, but the core PCE was 3.1 %. This means that core inflation in particular remained clearly too high to justify a rapid easing of monetary policy.
The problem at the moment is less the absolute increase than the timing. This is because the inflation figures hardly reflect the recent rise in oil and energy prices. In other words, the market was presented with a combination of already weak growth and still too high core inflation at the end of the week, even before the latest developments in energy prices were fully reflected in the data. It is precisely from this that the concern can be derived that inflationary pressure is more likely to increase again in the coming months than subside. 
This was negative for the Dow because such an environment limits the Fed's room for maneuver. In a classic risk-on scenario, weaker growth data could trigger fantasies of interest rate cuts. However, this mechanism is not currently working because the market is also worried that higher energy prices could fuel the inflation process again.
Rising Treasury yields and less interest rate cut fantasy weigh on equities
This correlation was also evident on the bond market. Over the course of the week, US yields rose significantly as market expectations of possible interest rate cuts were dampened. On Wednesday, the yield on the 10-year US government bond jumped by 9 basis points to 4.226 %, and by the end of the week it stood at around 4.28 %. At the same time, the US dollar rose significantly as a safe haven over the course of the week. 
Rising yields are problematic for the equity market for two reasons: firstly, they increase the discounting pressure on valuations. Secondly, they exacerbate financial conditions at a time when the economy is losing momentum anyway. In the case of the Dow, a higher interest rate level may help individual financial stocks in the short term, but a stagflationary environment weighs on credit quality, the propensity to invest and earnings momentum overall. As a result, major bank stocks in particular came under noticeable pressure at times during the week.
Oil price, VIX and headline risk
The rising oil price was again one of the most important factors on the market last week. On Monday, WTI shot up to around USD 119 intraday, while the VIX rose to 35.3 points at the same time. Although both initially fell back significantly, this was not enough to take the nervousness out of the market in the long term. On the contrary: the extreme volatility at the start of the week already showed how sensitively the entire market environment reacted to new reports from the Middle East. 
This impression was confirmed as the day progressed. Oil prices rose sharply again on Wednesday, and on Thursday attacks on tankers and fears of a continued closure of the Strait of Hormuz triggered the next wave of selling.
A sharp rise in oil prices acts like an additional tax on the global economy: transportation, production and consumption become more expensive, while at the same time inflation concerns increase. For equities, this means falling margins, more uncertain demand prospects and less monetary policy leeway. As a result, the rise in oil prices has not only become an issue for the energy sector, but a broadly based negative factor for the market as a whole. 
In order to be able to outline a bullish scenario for the coming weeks, an easing on the geopolitical side, including a significant decline in oil prices, is therefore an essential prerequisite.
Technical outlook for the Dow Jones Index
After last week's downward movement, the Dow Jones is now trading around eight percent below its all-time high, which was reached at the beginning of February. At the start of the new week, the current price range between 46,500 and 46,700 points is the main focus. This is exactly where the daily EMA 200 and the daily SMA 200 are located (see red lines in the chart).
If the 200-day line can be defended, there is still a chance of a recovery. But even if it breaks downwards, there are still some support zones waiting, as can be seen on the weekly chart. Instead of blindly plunging into a falling knife, restraint does not seem to be a wrong strategy in the current situation. If there are clear reversal signals at one of the support zones and a trend reversal at smaller trend sizes, there should still be enough time in the coming weeks to reposition.
Author: Tobias Schmid
Date: 16.03.2026
