NASDAQ Index, SP500, Dow Jones Forecasts – Profit-Taking Pressures US Stocks to Start 2025

Dow Jones Industrial Average Performance

The Dow Jones Industrial Average kicked off January on a volatile note, ending the day down by more than 150 points, reflecting a 0.4% decline. Earlier in the session, the index had surged over 300 points, but profit-taking in key 2024 performers, including Apple and Tesla, reversed gains. This movement follows a weak close to 2024, where the Dow, alongside other major indices, retreated during the final trading days. Despite these setbacks, the Dow ended 2024 with strong annual returns. However, downward pressure in the new year signals cautious sentiment among investors.

Technically, the Dow is trading below its 50-period moving average, suggesting bearish momentum. Key support lies near the 42,100–42,200 range, while resistance is evident around 42,800–43,300. The RSI is hovering below 40, indicating oversold conditions, which could prompt a short-term rebound. However, sustained trading below resistance zones may cap gains.

S&P 500 Index Performance

The S&P 500 mirrored the Dow’s performance, shedding approximately 0.2% after earlier gains faded. The index’s decline comes on the heels of a strong 23% rally in 2024, though December brought a 2.5% pullback. This marked the first time since 1966 that the S&P ended a year with four consecutive daily losses. Traders appear hesitant to push higher without clear economic catalysts, despite the index’s resilience throughout the previous year.

From a technical perspective, the S&P 500 is trading near critical support around 5,829–5,839, with resistance positioned at 5,979–5,990. The index remains below the 50-period moving average, reinforcing near-term bearish sentiment. The RSI hovers around 40, suggesting the index could be approaching oversold conditions but lacks clear bullish divergence. If the S&P breaches the 5,829 level, further downside could be anticipated.

Nasdaq Composite Outlook

The Nasdaq Composite also dipped by 0.2%, closing weaker after paring earlier gains. The tech-heavy index faced more pronounced selling pressure in late December, sliding over 2% to start the year. This comes despite strong annual performance in 2024, driven by notable tech sector rallies. Similar to the other indices, profit-taking weighed on the Nasdaq, reflecting a risk-off sentiment.

Technically, the Nasdaq finds support around the 20,748–20,800 level, with upside resistance near 21,200–21,300. The index currently trades below its 50-period moving average, indicating sellers are in control. The RSI at 39 suggests the market is edging into oversold territory, potentially setting up a short-term bounce if support holds. However, breaching lower support could lead to further declines toward the 20,600 area.

More Information in our Economic Calendar.