Dow Jones rebounds above 40,000 as traders brace for mega-cap earnings

• Dow recovers losses as investors await Microsoft, Apple, Meta and Amazon earnings.
• Tariff uncertainty weighs on sentiment; Dallas Fed index plunges to -35.8 in April.
• Gold rises nearly 1% as the US Dollar slumps to a three-day low near 98.87.

The Dow Jones Industrial Average (DJIA) erased earlier losses and rose, posting gains of over 0.13%. Market participants were awaiting earnings reports of four of the seven mega-cap companies, which lowered most US equity indices, including the DJIA. At the time of writing, the DJIA remains above the 40,000 figure despite being down on the day.

DJIA edges up 0.13% despite cautious mood, tariff concerns and mega-cap tech shares under pressure

Sentiment remains sour, as depicted by Wall Street trading with losses. Traders are bracing for the release of Microsoft, Apple, Meta and Amazon's weekly earnings reports. Meanwhile, Amazon shares are falling 2%, Microsoft tumbles over 1%, and Meta and Apple are the least damaged, each down 0.5% and 0.4%, respectively.

Earnings reports have been somewhat strong, but expectations for the second quarter have been lowered amid uncertainty about US trade policies. Earlier, US Treasury Secretary Scott Bessent said that they're making progress on some trade proposals, but regarding China, he said, "I believe that it's up to China to de-escalate, because they sell five times more to us than we sell to them, and so these 120%, 145% tariffs are unsustainable."

On the data front, the Dallas Fed Manufacturing Index plunged from -16.3 to -35.8 in April due to business executives turning pessimistic and blaming the tariff turmoil, according to the Dallas Fed report.

Aside from this, Gold prices remained underpinned by a weak US Dollar (USD), with the yellow metal rising almost 1% to $3,350. The US Dollar Index (DXY), which tracks the performance of a basket of six currencies against the US Dollar, shed 0.62% and is down at 98.87, the lowest level in the last three days.

Dow Jones price forecast

The Dow's bearish bias hasn't changed even though the index cleared the 20-day Simple Moving Average (SMA) key resistance and turned support at 39,876. Buyers seem to gather some steam as the Relative Strength Index (RSI) approaches its neutral line, but it remains below the 50 level.

If the DJIA clears 40,200, the next key resistance would be 40,500, followed by the 41,000 mark. Overhead key resistance lies at 41,565, where the 50-day SMA lies, followed by the 200-day SMA at 42,273.

On the other hand, the Dow's falling below 40,000 clears the path to test April 23's low of 39,486, followed by the April 22 high of 39,271 to close the gap witnessed between April 22 and 23.