Dow Jones Corrects Amid Tariff Fears on Pharmaceutical Imports

06/05/2025

Market Overview

Equity markets kicked off Tuesday’s session under pressure after fresh remarks from former President Donald Trump raised the prospect of new tariffs targeting pharmaceutical imports. The uncertainty weighed heavily on sentiment, particularly across defensive healthcare stocks, leading to renewed selling pressure in broader indices such as the Dow Jones Industrial Average. While global risk appetite remains cautious ahead of major U.S. economic data and the upcoming FOMC decision, traders have become more defensive as tariff rhetoric intensifies.

Technical Analysis

On the 1-hour chart, the Dow Jones index has transitioned into a corrective phase after losing short-term bullish momentum. Price has recently slipped below both the 34-period and 100-period moving averages, although the faster average still hovers above the slower one, reflecting residual upward bias. Sellers are currently pressing on a critical support level at 40,999.70. A clear and sustained break below this threshold would likely extend the pullback toward the immediate support at 40,878.63. If downward momentum continues to strengthen, additional targets lie at 40,724.63 and 40,554.60, respectively.

Despite the recent weakness, momentum oscillators show early signs of seller fatigue. RSI is attempting to stabilize above oversold territory, and MACD bars, while negative, appear to be flattening. This divergence suggests the potential for price consolidation, provided support at 40,999.70 remains intact. On the upside, any sustained recovery must first retake the 41,169.73 barrier. However, a confirmed breakout above the upper resistance at 41,444.80 is required to invalidate the bearish scenario and resume the prior bullish trend.

Key Technical Levels

Resistances: 41,169.73, 41,444.80

Supports: 40,999.70, 40,878.63, 40,724.63, 40,554.60

Fundamental Drivers

Traders are turning their focus to key macroeconomic developments this week. Tuesday’s U.S. trade balance report may offer insight into demand dynamics amid ongoing global supply adjustments. However, the main event remains Wednesday’s FOMC meeting, where the Federal Reserve is widely expected to hold rates at 4.5%. Forward guidance and the tone of Chair Powell’s comments will be closely watched for hints on future policy shifts. Meanwhile, ongoing concerns around trade protectionism, especially in the pharmaceutical sector, continue to fuel volatility in equity markets.