The Dow Jones Industrial Average moved sharply lower on Thursday, March 5, as investors reacted to rising geopolitical tensions in the Middle East and fading hopes for a near-term ceasefire.
The index, which tracks the performance of 30 major U.S. companies, dropped more than 500 points during the trading session. Other major benchmarks also struggled. The S&P 500 and the Nasdaq-100 both slipped slightly, each declining by over 0.10%.
War concerns pressure markets
Investor sentiment weakened after Iran denied reports that it had reached out to the United States to discuss ending the ongoing conflict. The denial quickly reduced expectations that a ceasefire might happen soon.
Data from the prediction platform Polymarket shows that traders are increasingly skeptical about a near-term peace deal. According to the platform, the probability of a ceasefire happening in March dropped to 27%. Meanwhile, the chances of a ceasefire in April also declined, falling by 23% to around 48%.
The uncertainty pushed investors toward caution. The Fear and Greed Index slid deeper into the “fear” zone, reaching a reading of 39.
At the same time, oil prices moved higher amid concerns about supply disruptions. Brent crude climbed to about $85 per barrel, while West Texas Intermediate rose to roughly $78.
A prolonged conflict in the Middle East could disrupt global supply chains again and potentially push inflation higher. That scenario would make it more difficult for the Federal Reserve and other central banks to begin cutting interest rates anytime soon — something investors have been hoping for.
Most Dow stocks decline
The sell-off was broad across the Dow components. Retail giant Walmart was among the biggest losers, dropping 3.90%. Shares of Merck & Co. fell 3.2%, while Sherwin-Williams, Procter & Gamble, Johnson & Johnson, and Amgen each declined by more than 2.5%.
Only a handful of companies managed to post gains. Salesforce surged 4.46%, leading the few stocks in positive territory. IBM, Chevron, and Microsoft also recorded modest gains of 1.90%, 1.01%, and 0.60%, respectively. Chevron’s rise was largely supported by the surge in crude oil and natural gas prices.
Technical signals point to more downside
From a technical perspective, the Dow Jones has been weakening for several weeks. The pullback began after the index tested the key psychological level of 50,000 — a milestone that often triggers profit-taking among investors.
Market analysts also point to a Rising Wedge pattern forming on the chart. This setup typically signals that an uptrend may be nearing its end.
The index has also slipped below its 50-period moving average, another sign that bearish momentum is strengthening. Meanwhile, the Average Directional Index has climbed to 15, suggesting the current sell-off could continue gaining momentum.
If the bearish trend continues, analysts say the next major level to watch is around 47,250, which aligns with the 23.6% Fibonacci retracement level.
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