(March 6): The Dow Jones Industrial Average — whose climb this year was cited by President Donald Trump as evidence of his policies’ economic effectiveness — has turned negative for the year as the ongoing conflict between the US and Iran weighed on investor sentiment.
The index, comprised of well-known names such as JPMorgan Chase & Co, Coca-Cola Co and Boeing Co, slumped 1.6% on Thursday as energy prices soared. Goldman Sachs Group Inc, Caterpillar Inc and Walmart Inc were among the gauge’s biggest decliners. The average is now down 0.2% year to date.
The “very large rise in crude oil today tends to weigh on the old-economy names first,” said Matt Maley, chief market strategist at Miller Tabak + Co. “However, if it continues, the inflation scare will spread to other parts of the stock market.”
Trump often views the stock market as a barometer of his success. When the Dow broke above the 50,000 level last month for the first time ever, he credited stocks’ strong performance to his tariffs and even predicted that the Dow would reach 100,000 points by the end of his second term.
However, the average has dropped 4.3% since then, falling below 50,000 in the process. Enthusiasm for stocks has been hurt by concerns over disruption from artificial intelligence and worries over private credit, in addition to the war between the US and Iran.
The Dow’s price-weighted structure and its focus on more traditional industries, like automobiles and manufacturing, means technology makes up a smaller part in the index than in the S&P 500, which is market cap-weighted. Financials hold the highest Dow weighting — about 26% — followed by tech at 18% and industrials at 17%. By comparison, the tech sector accounts for more than 30% of the S&P 500.
See also: Stocks fall as oil surge boosts treasury yields
Thursday saw another turbulent session in US stocks as the escalating conflict in the Middle East raised the prospect of sustained disruptions to energy markets and oil prices, with implications for inflation and global commerce. The S&P 500 fell 0.6% and is down 0.2% year-to-date.
“We also have the concerns surrounding the AI industry and more negative news on the private credit front,” Maley said. “So, it might not be long before the other major indices see more weakness, especially if crude oil prices continue to rise.”
Uploaded by Isabelle Francis
