Dow Jones Slides as Strong PMI Data Fails to Boost Index

The Dow Jones Industrial Average (DJIA) is experiencing a decline despite strong Purchasing Managers Index (PMI) readings. The S&P Global flash PMI reported manufacturing at 57, beating forecasts of 53.5, and services at 58.7, exceeding expectations of 56.

This surge in economic growth has not translated to the DJIA, which is trading near 51,500, having lost about two-thirds of its June-to-August rally. The index's 30 constituent companies sell into this growing economy, causing it to decrease in value on news that the economy is expanding faster.

McDonald's (MCD) is the biggest faller among DJIA constituents after committing $8.5 billion to franchisee support through 2036 at an investor day event. The S&P 500 and NASDAQ Composite are also lower, indicating market-wide selling rather than a single company's issue.

The same PMI survey revealed price gauges at their highest since October 2022, and the 10-year Treasury yield climbed above 5% to its highest level since July 2007. This increase in borrowing costs is likely to impact companies like Home Depot (HD) and Sherwin-Williams (SHW), which sell into a housing market that borrows at rates priced off the 10-year yield.