Dow Jones Today: DJIA Sinks on Inflation Fears as Oil Pushes Higher

The Dow Jones (DJIA) is trading lower on Thursday on the sixth day of the U.S.-Iran war. Traffic through the Strait of Hormuz remains constricted and has fallen by 95% since the weekend, pushing oil and gas prices higher while raising inflation risks.

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Gas prices in the U.S. have risen by 26.8 cents over the past week as consumers face pressure at the pump. That could deflate consumer spending as more is spent on gas and less on other items.

The price for a barrel of crude oil (CL) has risen by over $10 since last Friday, further boosting inflationary pressures. A common rule of thumb notes that for each $10 increase in oil, inflation rises by 0.1% and gross domestic product (GDP) falls by a similar amount.

Bank of America analyst Meghan Swiber pointed out that the U.S. is less vulnerable to oil shocks than in the past because it is now a net exporter of oil and gas. “We believe U.S. macro risks are likely limited unless [there is a] pronounced oil spike,” she wrote in a note to clients.

The economic impact of the U.S.-Iran war will depend on how long the conflict drags on, said Federal Reserve Bank of Richmond President Tom Barkin. In addition, Barkin expects inflation to remain “relatively high” for the next few months. The Fed is widely expected to hold interest rates steady at the March 18 Federal Open Market Committee (FOMC) meeting.

Meanwhile, the pace of layoffs leveled off in February, with U.S. employers announcing 48,307 job cuts, down 55% from 108,435 in the prior month and 72% year-over-year. In addition, employers have announced 156,742 job cuts year-to-date, the lowest for the two-month period since 2022.

“February’s dip is a nice reprieve from the elevated job cut plans to start the year,” said Challenger Chief Revenue Officer Andy Challenger. “With U.S. involvement in a growing war in Iran, the end of Q1 may bring more layoff plans as companies tighten belts amid uncertainty and higher costs.”

The Dow Jones is down by 1.93% 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.

The tech sector is split, with Cisco (CSCO) leading to the downside and Salesforce (CRM) leading to the upside. Nvidia (NVDA) is trading lower following reports that it had halted production of its H200 chips, which are designed for the Chinese market. Instead, it will reallocate capacity to its next-generation Vera Rubin platform.

Elsewhere, all stocks in the consumer defensive, healthcare, financial, and industrial sectors are trading lower, while Chevron (CVX), the lone energy stock in the Dow Jones, is rising alongside higher oil futures.

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 $558.35, implying upside of 16.75% from current prices. The 30 holdings in DIA carry 30 buy ratings, zero hold ratings, and zero sell ratings.

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