Dow Jones Today: DJIA Stumbles as IEA Plans Historic Oil Release; Inflation Rises 2.4%

The Dow Jones (DJIA) is trading lower on Wednesday as investors digest rising oil prices and their implications on the economy.

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The Consumer Price Index (CPI) rose by 0.3% in February, matching the consensus estimate. On an annual basis, CPI rose by 2.4%, also in line with expectations. Core CPI, which excludes volatile food and energy prices, also came in as expected, rising 0.2% month-over-month and 2.5% year-over-year.

“The biggest problem for many Americans is that we have ‘whack-a-mole’ inflation,” said Navy Federal Credit Union Chief Economist Heather Long. “Just as some items get back to more normal price points, other items start spiking.” In addition, the February CPI reflected prices before the U.S.–Iran war began. Oil and gas prices have surged since the Strait of Hormuz was blocked by Iran, creating supply shortages and limiting production in several Middle Eastern countries.

Energy accounts for roughly 7% of the CPI basket, although its indirect effect on the cost of other goods and services pushes its total weight closer to 15%.

To counter disruptions to the strait, the International Energy Agency (IEA) unanimously approved the largest-ever release of 400 million barrels of oil from the strategic reserves of member countries. The previous record of 182 million barrels was set in 2022 following the Russian invasion of Ukraine. The IEA’s members collectively hold 1.2 billion barrels in reserves, plus another 600 million barrels held under government obligation.

The IEA didn’t provide details on the timing or pace of the drawdown. Previous drawdowns peaked at around 1.4 million barrels per day, according to JPMorgan, well below the roughly 15 million barrels of oil disrupted by the closure of the strait.

The Dow Jones is down by 0.83% 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.

Both the consumer cyclical and financial sectors are showing weakness on the day with all nine stocks in the groups trading lower. Rising oil and gas prices risk higher inflation, which can reduce demand for discretionary items and loans. This also affects the industrial sector because it increases production and transportation costs. On the other hand, Chevron (CVX), the lone energy stock in the index, is in the green.

Elsewhere, tech stocks are split. Nvidia (NVDA) and Cisco (CSCO) are leading to the upside, while IBM (IBM) and Salesforce (CRM) are in negative territory.

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 $562.66, implying upside of 19% from current prices. The 30 holdings in DIA carry 30 buy ratings, zero hold ratings, and zero sell ratings.