Dow Jones Industrial Average (DJIA) Closes Near Three-Month Low As Treasury Yields Approach 5.30%

The Dow Jones Industrial Average closed just under 51,000, marking its lowest finish in more than three months as rising Treasury yields weighed on sentiment.

The 10-year Treasury yield climbed to near 5.30%, its highest level since 2007, even as US inflation data came in below analyst expectations for the month.

Core Personal Consumption Expenditures prices, the Federal Reserve’s preferred inflation gauge, rose 0.2% in August against a forecast of 0.3%, offering an initial lift to markets.

The annual PCE rate held at 3%, well below the 3.3% forecast, prompting futures markets to sharply reduce the probability of a Fed rate hike in October.

According to CME’s FedWatch tool, odds of an October hike fell to approximately 35% from around 51% the prior day, though a December increase remains widely anticipated.

The Dow briefly rallied following the inflation release before fading steadily through the remainder of the session, ultimately closing on its low for the day.

September proved particularly damaging for the index, which posted a 4.3% monthly loss compared to a far milder 0.5% decline for the S&P 500 over the same period.

The Dow also shed 2.7% over the third quarter, while both the S&P 500 and the Nasdaq Composite posted gains during that stretch, reflecting the index’s limited exposure to high-performing technology names.

The Dow’s underperformance highlights how its composition, which includes far fewer major technology stocks, left it unable to benefit from the reduced likelihood of near-term Fed tightening.

Other economic data released Wednesday painted a stronger-than-expected picture of the US economy, adding further upward pressure on bond yields throughout the session.

Private payroll figures from Automatic Data Processing showed 90,000 jobs added in the latest period, exceeding the 70,000 forecast and signaling continued labor market resilience.

The Chicago Purchasing Managers Index surged to 58.8 from a prior reading of 47.1, a significant jump that rattled bond markets and reinforced concerns about persistent economic strength.

Traders responded by selling Treasuries, pushing yields higher, with the climbing 10-year rate flowing directly into mortgage, auto, and business borrowing costs across the broader economy.

The dynamic of bonds falling on an inflation number that should logically have supported them underscores the complex crosscurrents currently driving US financial markets heading into the final quarter of the year.