The Dow Jones Industrial Average (DJIA) found near-term footing to end the trading week, rallying around 240 points from recent lows and struggling to stay on the high side of key moving averages. Shares took a hit this week after several entities in the lending and banking sectors filed for bankruptcy or flashed debt quality warnings, triggering a brief period of shaky sentiment. Investors regained their footing to end the week.
Friday’s rebound takes the Dow back from the brink
Friday’s stock market rally was driven in part by hopes of an easing of trade tensions after U.S. President Donald Trump played down the idea that his administration might eventually explore cutting tariffs on China. The Trump administration appears more wary of following through on its own threats to raise retaliatory tariffs on China, and investors continue to bet on a prolonged cooling off period in comprehensive tariffs threatened or imposed by the Trump administration throughout 2025.
After a brief flurry of angry social media posts and pulling out of planned sideline talks with Chinese President Xi Jinping, President Trump has retreated to the negotiating table. New trade talks between Donald Trump and Xi Jinping are now expected in the coming weeks, along with meetings between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.
The US government shutdown continues to roll forward with little sign of a quick resolution. Official data sets remain suspended or delayed, but this can only be good news for markets that remain dependent on impending rate cuts from the Federal Reserve (Fed). With official data going dark amid a federal funding shutdown, Fed officials will have very limited access to data that could push the U.S. central bank toward two quarter-point interest rate cuts before the end of the year.
Dow Jones Daily Chart
Frequently Asked Questions About Dow Jones
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is composed of the 30 most traded stocks in the United States. The index is price weighted rather than capitalization weighted. It is calculated by summing the prices of the permanent shares and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In recent years, it has been criticized for not being broadly representative enough because it tracks only 30 conglomerates, unlike broader indexes such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The overall performance of the component companies, revealed in quarterly corporate earnings reports, is the most important. US and global macroeconomic data also contribute as it influences investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also affects the DJIA, as it affects the cost of credit, which many companies rely heavily on. Therefore, inflation can be a significant driver as well as other metrics that influence the Fed’s decisions.
Dow Theory is a method of identifying the primary trend of the stock market developed by Charles Dow. An important step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. The volume is a confirmatory criterion. The theory uses elements of peak and trough analysis. Dow’s theory indicates three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution when the smart money disappears.
There are a number of ways to trade the DJIA. One is to use ETFs, which allow investors to trade the DJIA as a single security, rather than having to buy shares of all 30 companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts allow traders to speculate on the future value of the index, and options give the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds allow investors to buy a share of a diversified portfolio of DJIA stocks, providing exposure to the overall index.