Stocks drop from tariff uncertainty – Dow Jones and US Index Outlook

• US Stock Benchmarks retrace to start the week as tariff uncertainty reigns
• Indexes remain at inflexion points and will face key tests this week
• Exploring Technical Levels for the Dow Jones, Nasdaq and S&P 500

Traders returned from the weekend reassessing tariff risks, and judging by the open, uncertainty is far from resolved.

The start of the week is softer, contracting a strong Friday close despite geopolitical risk. Nothing escalated over the weekend on the Iran front, with further diplomatic exchanges expected Thursday in Geneva. Still, with WTI hovering around $66 per barrel, markets are clearly not pricing in a definitive peace scenario.

In a new twist, President Trump imposed a temporary tariff framework under Section 122 after the original International Emergency Economic Powers Act (IEEPA) “Liberation Day” tariffs were struck down by the Supreme Court following a lengthy decision.

The 150-day measure — originally designed in the 1970s under President Nixon to address trade and currency imbalances — now looks somewhat disconnected from today’s economic structure. Trump’s legal team will likely face renewed challenges ahead of the July 20 deadline if they intend to extend the policy.

A key concern is the potential refund of the $133 billion in levies collected on imports, which could carry significant budgetary consequences.

Businesses have openly expressed frustration, and several nations have pushed back. China urged the US to withdraw the new measures, while European officials also actively expressed theur dissatisfaction by pulling the brakes on trade with their outer-Atlantic counterpart — adding pressure to overall risk sentiment.

For those interested, here's a very interesting recap of the tariff situation.

For now, the Dow Jones is leading US indices lower along with a rough drop in the US Dollar. All Indexes are now down beyond 1%, marking an ugly start to the week.

Let's look at the technical situation by diving into today’s session charts and key trading levels for the major US indices: the Dow Jones, Nasdaq, and S&P 500.

Read More:

• Sell “America” reemerges after Trump’s tariff defiance – USD/JPY, Gold, Hang Seng Index intraday outlook
• Markets Weekly Outlook - The gavel falls on global tariffs as inflationary fears return to the fold
• GBP/JPY marks a major top – Will it revert to 200.00? FX Technical Analysis

Today's drop is broad when looking at the overall state of the Stock Market, with only healthcare and communications holding a recent performance amid the sour appetite.

Microsoft, Amazon, Oracle, Tesla and Financials which all bounced on Friday are now getting hammered. Let's see how this leads the action throughout the week.

The morning candle for the Dow is ugly. After tilting to the downside, bearish momentum accelerated at the start of the week and has now officially breached the 50-Day Moving Average (49,080), which coincides with a pivotal psychological level.

Some small mean-reversion attempts are now occurring, but as long as the price action remains below the 49,000 zone, traders can expect further downside.

We will look at a daily outlook for US indexes tomorrow to spot where a major correction could take the market. What's concerning for sure is that it's the first time since November that prices trade below the key MA.

Dow Jones technical levels for trading:

Resistance Levels

• Major Pivot – 49,000 to 49,200 (500-Day MA 49,080)
• 4H 200-MA 49,358
• January ATH Resistance 49,500 to 49,700
• 49,900 to 50,000 Resistance (Range Highs)
• Index All-Time highs 50,512

Support Levels

• Past week Support 48,600 to 48,700 (key Support, bearish below)
• Key Support around 47,500
• 45,000 psychological level (Main Support on higher timeframe)

Today's downside in the Nasdaq still looks relatively contained (compared to the DJIA), and bulls will face a key test in levels right ahead.

The 24,500-24,600 Support, low of the shorter consolidation range, will be a last rampart before the action turns bearish. Watch out however as the RSI is already pointing towards that direction.

Nasdaq technical levels of interest:

Resistance Levels

• 4H 50-period MA 24,860
• Key Pivot 25,000 to 25,250
• 25,400 to 25,500 Key intraday resistance
• All-time high resistance zone 26,100 to 26,300

Support Levels

• 24,500 to 25,600 Key Support (immediate, pivotal support)
• February Support 24,150 to 24,200
• October - November Support 23,800 to 24,000
• Early 2025 ATH at 22,000 to 22,229 Support

The S&P 500 is playing tricks after an upside fakeout on Friday, now turning back towards its bearish channel formation.

Similarly as Nasdaq, the Spoose is holding well in today's action, but traders should make sure to keep track of the RSI, starting to turn bearish as we speak.

Looking at the Dow Jones, similar conditions could then spread to a wider selloff. Bulls will need to watch closely to the action around 48,000.

S&P 500 technical levels of interest:

Resistance Levels

• 6,904 2H 200-MA
• Previous ATH Resistance 6,945 to 6,975
• Current ATH 7,020
• All-time High Resistance 7,000 to 7,020 (range highs)

Support Levels

• Mini-Support 6,830 to 6,850 and 2H 50 MA
• 6,800 Psychological Support
• February lows 6,730 (Higher timeframe range lows)
• 6,400 Major psychological support

Safe Trades and keep a close eye on the US-Iran developments!

Follow Elior on Twitter/X for Additional Market News, interactions and Insights @EliorManier