• DJIA trades near 52,900, roughly 190 points lower, back on its 50-day EMA.
  • Crude Oil up a sixth straight day, the longest run since March.
  • Two-year yield at a January 2025 high, 58% priced for a September hike.

The Dow Jones Industrial Average trades near 52,900, roughly 190 points lower, in the first session since Friday. Crude Oil has risen for six days running and the two-year Treasury yield sits at its highest since January 2025. Neither is an equity story by itself. Together they set the rate at which this index gets discounted, and both moved against it while the market was shut for the holiday.

Riyadh's way around Hormuz goes through the Red Sea

West Texas Intermediate (WTI) Crude Oil has climbed for six sessions, the longest run since a seven-day stretch in March, and Brent Crude Oil trades near $98.00. American forces struck three Iranian tankers over the weekend and sank one, after Iran fired ballistic missiles at American positions. Houthi drones and missiles then hit Saudi Aramco facilities at Abha, Najran and Jazan this morning, halting operations and wounding more than 70 people.

The Strait of Hormuz is effectively shut, so Saudi Arabia had already rerouted most of its exports to Yanbu on the Red Sea. The Red Sea is what the Houthis hit this morning. Tanker traffic through the strait is running well below normal, which is the physical half of the move. Refining capacity is the tighter constraint, down in Russia to Ukrainian drones and down in the Gulf to the war, and American diesel has set a record above $5.90 a gallon.

The front end prices barrels now

The two-year Treasury yield trades at its highest since January 2025, and the 10-year sits above 4.80% after taking out the November 2023 high it made last week. Futures price roughly 58% odds of a quarter-point increase at the September 15-16 meeting. Energy runs straight into the headline inflation index, and the governors who leaned toward a hold made that hold conditional on monthly inflation moderating. A war premium is a supply shock, and a central bank cannot drill.

Higher yields reach this index twice. They lift the rate at which 30 sets of cash flows get discounted, and they lift the funding cost of the financial and consumer credit names that carry more than a quarter of the weight in it. Energy arrives from the other end, through freight, fuel, packaging and the input bills of companies that mostly buy it rather than sell it.

The other price increase arrived at 04:01 GMT

Canada's retaliatory tariffs took effect overnight on roughly $20 billion of American goods, at rates of 15%, 25% and 50% across more than 700 items. The rates were taken item by item from the American Section 232 and Section 338 schedules, and steel and aluminum doubled to 50%. Ottawa built the list around steel, appliances, agricultural equipment, pulp and paper and electronics.

That list is a description of what this index makes, and industrials run close to 16% of index weight. The levy bites both ways, because American steel and aluminum already carry 50% on the way in. Trump spent Monday telling Bombardier (BBD.A, BBD.B) it cannot sell aircraft in the United States unless it builds them there. That is a tariff without the paperwork.

Two prints, and a committee that cannot speak

The Producer Price Index (PPI) lands Thursday, September 10 at 12:30 GMT, with consensus at 5.3% YoY on the headline and 4.6% on the core measure. The Consumer Price Index (CPI) follows Friday at the same hour, with the headline seen holding at 3.4% and the core easing to 2.4%. That leaves Friday as the last inflation reading the committee sees before it votes. The Federal Open Market Committee (FOMC) meets September 15-16 with a fresh set of projections and has been in blackout since September 5.

Households have repriced none of it. The New York Federal Reserve's August survey puts one-year inflation expectations at 3.6% and the five-year at 3.0%, both unchanged from July, with the three-year up a tenth to 3.2%. The same survey has the share expecting higher unemployment in a year at 44.4%, the highest since April 2020, while the average odds of personally losing a job fell to 13.8%, the lowest since February. Respondents expect the recession to happen to somebody else.

Levels to watch

Resistance: The 53,100 area caps the session and is the first hurdle. Above it sits 53,250, where Friday topped out before sliding to just above 53,000. Then comes the 53,500 shelf that the payrolls print took away on September 4, the 53,800 band that capped every rally from August 14 through August 28, and the early-August peak just short of 54,750, roughly 3.5% overhead.

Support: The rising 50-day Exponential Moving Average (EMA) near 52,800 is what the index is standing on, and the session low in the 52,700 area is the lowest trade of the month. Beneath that sit 52,500 and the 52,000 handle, with the June low near 51,300 behind them. The 200-day EMA near 50,200 is not in play.

Bias: Bearish while the index holds beneath 53,250, with the 52,700 area the first objective and 52,500 behind it. The session low has already erased the whole of the September 3 rally, and the daily Stochastic Relative Strength Index (Stoch RSI) near 41 has not reached oversold since July, so this leg has not spent its momentum. The five-minute reading near 62 rising off the low is the bounce rather than the turn. A daily close beneath the 50-day EMA near 52,800 puts the 52,000 handle in range before the meeting, and a daily close back above 53,250 voids the case and restores 53,500.

Dow Jones daily chart

Dow Jones FAQs

The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dowโ€™s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.