Wall Street Plunges Amid Geopolitical Tensions

On Friday, June 13, 2025, Wall Street closed sharply lower as geopolitical tensions escalated with Iran’s retaliation against Israel. The Dow Jones Industrial Average (DJIA) dropped 1.79%, or 769.83 points, to end at 42,197.79. The S&P 500 fell 1.13% to 5,976.97, while the Nasdaq declined 1.30% to 19,406.83, reflecting a broad market sell-off.

Technical Analysis: Bearish Momentum Dominates

The DJIA’s recent price action signals caution for investors. After peaking near 43,158.86 in mid-May, the index has been in a downtrend, breaking below its 20-day Simple Moving Average (SMA) at 42,418.40. On June 13, the index closed near the lower Bollinger Band at 41,677.94, hinting at potential oversold conditions.

• RSI (14): The Relative Strength Index stands at 50.36, trending downward but not yet in oversold territory (below 30). This suggests the selling pressure may continue before a reversal.
• MACD (12, 26, 9): The MACD line at -32.58 is well below the signal line at 331.23, with a bearish histogram of -363.81, confirming strong downward momentum.

What’s Driving the Decline?

Several factors contributed to the market’s sharp decline:

• Geopolitical Risks: Iran’s retaliation against Israel has heightened uncertainty, prompting investors to reduce risk exposure.
• Market Sentiment: The broader market sell-off in the S&P 500 and Nasdaq reflects a flight to safety, with investors favoring bonds over equities.
• Technical Breakdown: The DJIA’s failure to hold key support levels has triggered stop-loss selling, exacerbating the decline.

Next Week Outlook: Volatility Ahead

Looking ahead to the week of June 16, 2025, the DJIA faces critical levels:

• Support to Watch: The lower Bollinger Band at 41,677.94 is the immediate support. A break below this could see the index test 41,000, a psychologically significant level.
• Resistance: The 20-day SMA at 42,418.40 will act as near-term resistance. A recovery above this level could signal a short-term bounce toward 42,800.
• Key Catalysts:
  • CPI Data: The Consumer Price Index report on June 18 will provide insights into inflation trends, potentially influencing Federal Reserve policy expectations.
  • Geopolitical Developments: Any de-escalation in the Iran-Israel conflict could spark a relief rally, while further escalation may deepen the sell-off.

Investor Takeaways

The Dow Jones is at a pivotal juncture. While technical indicators suggest potential for a near-term bounce, geopolitical risks and upcoming economic data could drive further volatility. Investors should:

• Monitor the 41,677.94 support level closely.
• Consider hedging portfolios with defensive assets like gold or bonds.
• Stay updated with our daily market insights for the latest developments.

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Disclaimer

The information provided in this article is for informational purposes only and does not constitute financial, investment, or trading advice. Past performance is not indicative of future results. Investing in the stock market involves risks, including the potential loss of principal. Readers are encouraged to conduct their own research or consult with a qualified financial advisor before making any investment decisions. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any other agency, organization, or company.