The Dow Jones (DJIA) is trading higher on Monday after President Trump said the U.S. is negotiating with Iran to end the war while also issuing a new threat on the country’s energy infrastructure.
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Forget margin or options. Here's how the pros trade QQQ“The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran,” he said in a Truth Social post. At the same time, Trump also warned that the U.S. would respond by “completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island” if a deal isn’t reached and if the Strait of Hormuz remains closed.
Meanwhile, rate hike odds staged a significant drawdown after Fed Chair Jerome Powell voiced his support against raising interest rates in response to the oil supply shock. The odds of a 25 bps increase by year-end on the CME FedWatch tool dropped to 5.4% compared to 22.2% on Friday.
“By the time the effects of a tightening in monetary policy take effect, the oil price shock is probably long gone, and you’re weighing on the economy at a time when it’s not appropriate,” Powell said in a speech at Harvard University. “So the tendency is to look through any kind of a supply shock.” Powell added that the current rate, between 3.50% and 3.75%, is a good spot for the Fed to be in as it reviews the effects of the war and tariffs on inflation.
Federal Reserve Governor Stephen Miran has a much more dovish view than Powell and reaffirmed his stance that the central bank should cut by 100 bps over the next year. Miran added that he sees no evidence of wage-price spirals or higher inflation expectations.
The Dow Jones is up by 0.59% at the time of writing.
Which Stocks are Moving the Dow Jones?
Let’s pivot to TipRanks’ Dow Jones Heatmap, which illustrates the stocks that have contributed to the index’s price action.
Brent crude (BZ), the international benchmark for oil, is trading slightly lower on the day, giving a boost to the inflation-sensitive consumer cyclical sector. Within tech, software stocks Microsoft (MSFT) and Salesforce (CRM) are also making a comeback following several volatile weeks of trading.
Elsewhere, all five financial stocks are trading as the risk of higher rates eases lower, while Caterpillar (CAT) is leading the industrial sector lower with a loss of over 3%.
Is the Dow Jones a Good Long-Term Investment?
The SPDR Dow Jones Industrial Average ETF (DIA) is an exchange-traded fund designed to track the movement of the Dow Jones. As a result, DIA is rising alongside the Dow Jones today.
Wall Street believes that DIA stock has room to rise. During the past three months, analysts have issued an average DIA price target of $562.01, implying upside of 23.62% from current prices. The 30 holdings in DIA carry 30 buy ratings, zero hold ratings, and zero sell ratings.