Dow Jones Industrial Average twists as investors shake off overnight dip

• The Dow Jones tumbled during the overnight session before Monday's opening bell.
• Trade war fears are back on the table after Trump gets into a political scuffle with Colombia.
• Fresh rate cut hopes are bolstering equities from early week lows.

The Dow Jones Industrial Average (DJIA) dipped into the 44,000 handle during Monday's early overnight session, driven lower by a fresh bout of souring in investor risk appetite after a Chinese company globally released an open-source competitor to US-based AI models that have been largely proprietary up to this point. Investor sentiment was driven further into the floorboards by a political spat between United States (US) President Donald Trump and Colombia over the weekend after a disagreement between the two countries over the return of Colombian migrants from the US led to President Trump losing his cool and threatening a 50% tariff on all goods imported into the US from Colombia.

Equities rallied in the early hours of the US market session as investor focus pivoted to rate cut hopes from the Federal Reserve (Fed). The Fed is due to deliver its latest rate call later this week, and although the US central bank is broadly expected to stand pat on rates for the time being, traders are ramping up their bets of further rate cuts in 2025. According to the CME's FedWatch Tool, rate markets are pricing in a full 50 bps of rate trims through the rest of the year, up from last week's bets of 25 bps.

The tech sector got rattled after a Chinese artificial intelligence lab released their DeepSeek-R1 AI model, making it open source and proving that anybody can develop a heavy-hitter AI model without heavy investment in expensive US-produced silicon and microchips, something that US trade barriers were explicitly instituted to keep out of the hands of the Chinese. With DeepSeek making waves in the AI space, investors are questioning the point of keeping up silicon trade barriers with China and investors who have bought into US-based tech companies providing chip solutions for AI projects are getting nervous.

Dow Jones news

Despite struggling to pare losses and return to Friday's closing bids, most of the Dow Jones' listed securities are on the rise during Monday's US trading session. However, losses are largely contained within key tech darlings, keeping the DJIA off-kilter. Nvidia (NVDA) is taking it on the chin on Monday, down around 13% on the day and testing below $125 per share with the silicon-puncher's dominance in the AI space getting threatened by spunky Chinese upstart DeepSeek hinting that Nvidia's market dominance may not last forever, or even for the rest of the year.

Dow Jones price forecast

The Dow Jones kicked off the new trading week with a fresh test of the 44,000 handle, but the index's early pivot into the bearish side is facing a fresh upshot from bidders, and it has climbed back into range of 44,400. Despite near-term declines, the major equity index is still tilted firmly toward the bullish side, closing in the green for all but two of the last ten consecutive trading days.

The Dow Jones is still trading on the wrong side of record highs above 45,000 posted last November. Still, equity traders are pushing stocks back up the same old hill as the DJIA climbs from the last major swing low into the 41,700 region.

Dow Jones daily chart