April wasn’t a fun month for the Dow Jones Industrial Average Index. Following the announcement of sweeping US tariffs, the Dow tumbled just shy of 10% in the space of a few days. And while it has recovered some of those losses in the following weeks, it’s still down 4% since the start of April and 5% since the start of 2025.
So with tariff policies being pulled back and investor sentiment steadily improving, could the index and its constituents bounce back this month? Here’s what the latest forecasts are predicting.
Dow Jones’ outlook
Tariff-driven trade disruptions are bad for most businesses. But they’re especially problematic for a number of prominent Dow constituents such as Boeing, Caterpillar, and General Motors. With all three businesses reliant on global supply chains, higher import costs translate into higher production costs that eat into margins. Even if the added expenses can be passed onto customers, higher prices likely mean lower volumes.
This higher pricing/margin pressure issue also exists among consumer goods companies like Procter & Gamble as well as Coca-Cola. And overall, an estimated two-thirds of the companies in the index have or will be impacted by trade tariffs. With that in mind, it’s not so surprising to see the index sell off so aggressively.
Sadly, the worst might not be over. The 90-day pause on higher global US tariffs comes to an end in July. And assuming the elevated rates go back into play, The Economy Forecast Agency has predicted the Dow Jones could fall to around 35,160 points.
If this forecast proves to be correct, it suggests a further 12.6% decline is on the horizon, with no rebound likely to emerge this month.
An opportunity for long-term investors?
While this outlook’s certainly bleak, it’s important to remember that forecasts aren’t set in stone. More favourable pullbacks in trade policies this month could continue to improve investor sentiment. And even if the worst comes to pass, high-quality businesses will eventually adapt to the new environment.
Regardless, there are a few Dow Jones stocks that are far more insulated against international trade policies. Take McDonald’s Corp (NYSE:MCD) as an example. Its network of franchise restaurants sources ingredients locally. And while a slowdown in consumer spending could hurt hamburger sales, the bulk of profits actually comes from franchise rents and royalties.
Of course, there are still key risks to consider. The scrutiny surrounding processed foods and their role in creating obesity could drive customers away in the long run while damaging the firm’s brand perception. At the same time, its reliance on a franchise model could backfire if it’s unable to maintain a healthy relationship with franchisees (a problem Domino’s Pizza Group recently had to overcome).
Nevertheless, for investors, while seeking refuge from the market turbulence, McDonald’s might be worth mulling. And while 2025 might continue to be a rough year for the Dow, in the long run, I remain optimistic for this US stock index.
