Dow's 96-Point Drop Highlights Price-Weighted Index Effect

The Dow Jones Industrial Average declined by 96 points on Thursday as the S&P 500 hit an intraday record high. The divergence between the two indices was driven by index construction, not widespread risk-off sentiment.

Cisco Systems' share price drop of $10.77 weighed heavily on the Dow, accounting for a loss of about 64 points due to its price-weighted approach. This contrasted with the S&P 500 and Nasdaq, which were boosted by chipmakers Sandisk and Micron, but not included in the Dow index.

The Producer Price Index for July showed no change, supporting expectations that the Federal Reserve may pause rate hikes in September. Markets reflected a 65% probability of this outcome, while Brent crude declined by 3%.