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23 May 2025,05:47

Daily Market Analysis

Trump’s Tax Bill Passes in House of Representatives, Wall Street Under Pressures

23 May 2025, 05:47

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Key Takeaways:

*Trump’s tax bill passed in the House of Representatives rattled the financial market. 

*G7 summit said to increase sanctions on Russia, heightened market uncertainties.

Market Summary:

The U.S. financial markets are experiencing heightened volatility as President Donald Trump’s sweeping tax and spending bill, recently passed by the House of Representatives on May 22, 2025, moves to the Senate for approval. The bill, which extends the 2017 tax cuts, introduces new tax breaks, and increases defense and border security spending, is projected to add $3–$5 trillion to the national debt over the next decade, prompting significant concerns in the financial markets. Moody’s recent downgrade of the U.S. sovereign credit rating from Aaa to Aa1, citing a growing $36.2 trillion debt pile, has exacerbated investor unease, leading to sell-offs in both equity and bond markets. The Dow Jones Industrial Average dropped over 1,000 points from its recent high, while the Nasdaq and S&P 500 have also retraced. The VIX index, a measure of market volatility, is showing signs of a rebound after declining since April. 

While the Dow, Nasdaq, and S&P 500 face near-term risks from policy gridlock and rising yields, a resolution in the Senate and debt ceiling talks could stabilize markets. The rebounding VIX suggests investors should brace for continued volatility. By staying informed and adjusting portfolios strategically, investors can navigate this challenging environment.

Technical Analysis:

Dow Jones, H4

The Dow Jones Industrial Average has gained nearly 3% in May, maintaining its bullish trajectory for most of the month. However, recent price action has seen the index break below its established uptrend channel, now testing critical support at the 41,600 level—its previous swing low. A failure to hold above this threshold could signal a breakdown in the broader uptrend, potentially shifting the bias to bearish in the near term.

Momentum indicators reinforce caution. The Relative Strength Index has edged lower in recent sessions, while a bearish MACD crossover above the zero line indicates that upward momentum may be fading. The 41,600 level now serves as a key pivot. A decisive breakdown below it could open the door to further downside, particularly if macro headwinds intensify.

Resistance Levels: 42860.00, 43880.00
Support Levels: 41660.00, 40765.00

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