Dow Jones Rises on Lower Treasury Yields and Oil Prices
The Dow Jones Industrial Average (DJIA) rose 0.63% on Tuesday, buoyed by a pause in the rally of long-dated Treasury yields. The 10-year Treasury yield fell 4.2 basis points to 5.26%, while the 30-year yield dropped 2.6 basis points to 5.63%. Despite the decline, both yields remain at their highest levels since 2002.
Lower oil prices also contributed to the Dow's gains. Brent crude (BZ) dropped 0.4% to $99 per barrel, as Middle East exports rebounded to prewar levels and Saudi Arabia's East-West pipeline resumed operations following a drone attack.
Easing oil prices and Treasury yields have reduced expectations for an interest rate hike at the October 28 Federal Open Market Committee (FOMC) meeting. The odds of a 25-basis-point hike fell to 19.4%, down from 22.1% a day prior and 50.9% a week earlier. However, a December rate hike remains likely, with a 68.8% probability.
Tech and consumer cyclical stocks led the Dow's gains, with Amazon (AMZN), Microsoft (MSFT), and Cisco (CSCO) performing strongly. Chevron (CVX), the only energy stock in the index, also rose despite lower oil prices. Analysts remain optimistic about the SPDR Dow Jones Industrial Average ETF (DIA), with an average price target of $606.77, suggesting a 17.75% upside from current levels.