Dow Jones Today: DJIA Stumbles as Bond Selloff Pressures Tech Stocks

The Dow Jones (DJIA) is trading lower on Tuesday as a rout in bonds weighs on tech stocks.

The 30-year Treasury yield is up by 3.6 bps to 5.18% and is at its highest level since April 2007. That places pressure on stocks, as higher yields may encourage investors to rotate capital out of equities and into fixed-income assets. Furthermore, higher yields reduce the present value of future earnings, which in turn lowers valuations. Growth stocks are especially rate-sensitive, since much of their value is tied to cash flows expected in the future.

Both Citigroup and Barclays believe that 5.5% is the new test for the 30-year yield, up from 5%. “Investors’ calculus in terms of buying the dip on Treasuries has changed,” said Citigroup macro rates strategist Jim McCormick. Furthermore, a survey from Bank of America showed that 66% of fund managers expect the yield to top 6% over the next year, a level not seen since June 2000.

Long-term yields have surged since the start of the U.S.-Iran war on February 28, with rising oil and gas prices adding fuel to the flame. A resilient economy is also contributing to the rally, delaying the timeline for rate cuts. By year-end, the most likely outcome with 41.5% odds is for the Fed to raise rates by 25 bps, according to the CME FedWatch tool. The second most likely outcome at 41.1% is for the Fed to hold rates steady.

On the U.S.-Iran war front, President Trump called off a planned attack against Iran on Monday evening. The strikes were scheduled for Tuesday, with Trump adding that he would provide Iran with “maybe another two-three days” or until “the beginning of next week” to agree to a deal.

The Dow Jones is down by 0.44% 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.

Tech stocks are leading the index lower, with Nvidia (NVDA), Microsoft (MSFT), Cisco (CSCO), and Amazon (AMZN) all in the red. Nvidia is set to report its earnings after the closing bell tomorrow, with several Wall Street analysts raising their price targets ahead of the event.

Financial stocks are facing pressure, with Goldman Sachs (GS) down by nearly 2%. On the other hand, healthcare and consumer defensive stocks are trading higher, with Merck (MRK), Amgen (AMGN), Walmart (WMT), and Coca-Cola (KO) all up by at least 1%.

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 $572.91, implying upside of 15.83% from current prices. The 30 holdings in DIA carry 30 buy ratings, zero hold ratings, and zero sell ratings.