Dow Jones Climbs Despite Rising Treasury Yields and Weak Services Data
The Dow Jones Industrial Average (DJIA) gained 0.21% on Monday as Treasury yields continued to climb and new data on the services sector was released. The 10-year Treasury yield rose by 5.5 basis points to 5.33%, while the 30-year yield increased by 5.9 basis points to 5.68%. Higher yields often make stocks less attractive, increasing the opportunity cost of holding them.
The Institute for Supply Management (ISM) reported that its Services Purchasing Managers’ Index (PMI) fell to 54.9 in September from 55.4 in August, missing expectations of 55. Despite the decline, the services sector has now expanded for 27 straight months. A reading above 50 indicates expansion, while a reading below 50 signals contraction.
Inflation pressures in the services sector remain elevated, with the prices index within the Services PMI rising to 74, its highest level since July 2022. This suggests that inflation is not easing but rather continuing to build.
Brent crude oil prices dropped 1.1% to $101 per barrel after reports that Saudi-backed Yemeni government forces had secured control of the Bab el-Mandeb Strait.
In terms of individual stocks, tech companies like Nvidia (NVDA), Microsoft (MSFT), and Alphabet (GOOGL) showed strength. Visa (V) was the top performer after expanding its partnership with the NFL to 13 teams. Meanwhile, all four healthcare stocks in the index traded lower, and Chevron (CVX) fell alongside oil prices.
The SPDR Dow Jones Industrial Average ETF (DIA), which tracks the DJIA, also rose. Analysts predict an 18.61% upside from current prices, with an average price target of $606.46 over the next three months.