The Dow Jones (DJIA) is trading slightly lower on Tuesday following an inflation update from the Bureau of Labor Statistics (BLS) and a Hormuz fee reversal from President Trump.
Summer Sale - Claim 70% Off TipRanks
- Unlock powerful investing tools with TipRanks Premium to make smarter, more confident investment decisions
- Subscribe to TipRanks Smart Investor Newsletter, and discover new investing opportunities with data-backed stock picks
Inflation cooled sharply in June, with the Consumer Price Index (CPI) declining 0.4% from the previous month. That marked its largest drop since April 2020 and beat expectations for a 0.1% decrease. The decline was largely driven by lower energy prices, with fuel oil falling 9.2% during the month. Core CPI, which excludes food and energy, remained unchanged month-over-month and also came in below forecasts for a 0.2% increase.
Rate hike odds plummeted in response to the data. At the July 29 Federal Open Market Committee (FOMC) meeting, the odds of a 25 bps hike sank to 16.6% from 41.7%. In addition, the odds of steady rates rose to 83.4% from 53.8%.
Still, the decline in inflation could be short-lived as tensions between the U.S. and Iran threaten to drive energy prices higher. Brent crude (BZ), the global oil benchmark, has climbed 20% since July 6. “The renewed war in Iran will almost certainly push inflation back up,” said Navy Federal Credit Union Chief Economist Heather Long. “Relief could be short-lived.”
Meanwhile, President Trump pulled back plans to levy a 20% cargo tax on ships crossing through the Strait of Hormuz under U.S. protection. The fee will be replaced by “Trade and Investment Deals” that Gulf nations make with the U.S., Trump said in a Truth Social post.
The Dow Jones is down by 0.16% 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.
IBM (IBM) is the most popular Dow Jones stock of the day, although not for good reason. Shares of the tech giant are set for their worst day on record after the company provided disappointing preliminary second-quarter earnings. IBM reported revenue of $17.2 billion and an adjusted EPS of $2.93. Both fell short of the analyst estimates of $17.86 billion and $3.01, respectively.
Elsewhere, all four healthcare stocks are in the red, led to the downside by UnitedHealth Group (UNH). The company is set to report its earnings on Thursday and is up by nearly 90% year-to-date. Finally, Goldman Sachs (GS) is the top performer in the index after reporting stellar second-quarter results.
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 falling 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 $598.08, implying upside of 14.27% from current prices. The 30 holdings in DIA carry 29 buy ratings, one hold rating, and zero sell ratings.