Dow Jones (DJIA) Slips, S&P 500 Choppy Ahead of US Inflation Data. What Comes Next?

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Most Read: Markets Weekly Outlook - US Inflation, EU/UK GDP and RBA Meeting to Shape Market Moves

Wall Street's main indexes slipped on Monday as the US session got into gear. Market participants are bracing for a busy week which includes US inflation data and major geopolitical developments.

At the time of writing the S&P 500 was down 0.15% while the DOW was down as much as 0.54%, weighed down largely by industrial stocks, with the sector down 1.6% on the day.

Source LSEG

US-China Tariff Deadline

A U.S. tariff deadline on China, due to expire on Tuesday, is expected to be extended again as negotiations continue.President Trump has not yet approved an extension of the trade truce with China. If tariffs are reinstated, it could reignite the trade war between the two largest economies, which unsettled global markets earlier this year.

Such a move could lead markets back toward risk-off sentiment which could weigh on equity markets.

When asked about the deadline on Monday, Trump said, "We’ll see what happens," adding that his relationship with China's President Xi is strong.

As time runs out, Trump urged China on Sunday to buy four times more American soybeans, saying it would help lower the U.S. trade deficit with China.

NVIDIA and AMD Agree to Pay US Government 15% of Revenue from AI Chip Sales

One of the major areas which have been discussed between US and Chinese officials has been around US export controls of microchips which power AI.

Despite national security concerns about trading semiconductors and other products, the Trump administration has focused on deal-making in negotiations. Nvidia and AMD are set to pay the U.S. 15% of their revenue from selling AI chips to China under an unusual financial agreement with the administration.

US-Russia Talks Boosts Optimism

At the upcoming US-Russia summit, analysts believe Putin will only agree to a ceasefire if Ukraine makes significant territorial concessions. Trump's main bargaining tools are the threat of sanctions and trade pressure on Russia's partners, like India.

It's unclear how much Russia's economic struggles might force compromises or how far Trump will push for a favorable deal. Without Ukraine or European representatives at the summit, any agreement on Friday is likely to be only a preliminary step.

A preliminary deal may still provide a shot in the arm for global markets in the hopes that a lasting agreement may materialize.

The Week Ahead

Alongside the US-China trade discussion, US inflation data scheduled for release tomorrow could have a major impact on markets and stoke volatility.

Analysts expect core inflation (CPI), which excludes food and energy, to rise 0.3% in July. This shows ongoing price increases in areas like housing and medical services, despite the Fed's efforts to control inflation.

This rise keeps inflation above the Fed's 2% yearly target, making it harder for policymakers to stabilize prices without risking a major economic slowdown.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis - Dow Jones Index

From a technical standpoint, the Dow Jones index is currently testing a confluence level of support at 44100.

A golden cross pattern is unfolding as the 100-day MA is crossing above the 200-day MA which could hint at further bullish momentum.

To the downside, immediate support rests at the 43500 handle before the 43000 handle comes into focus.

A move higher here needs to gain acceptance above the 45226 handle if the DOW is to continue on its impressive run since the early April lows.

Dow Jones Daily Chart, August 11, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - DOW JONES Index

Looking at OANDA client sentiment data and market participants are short on the DOW with 59% of traders net-short. I prefer to take a contrarian view toward crowd sentiment and thus the fact that so many traders are short means the Dow Jones Index could rise in the near-term.

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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