The Dow Jones Industrial Average closed just short of 53,300, down roughly 250 points or about 0.5%, following American military strikes on two Iranian rocket launchers on Larak Island and subsequent missile and drone attacks by Tehran on bases in Jordan and the United Arab Emirates [1]. The index opened just below 53,500, briefly surpassed that level, then dropped to the 53,100 area before recovering about 150 points by the close [1]. Crude oil prices rose more than 2%, with Brent holding above $90.00, benefiting Chevron (CVX), the only energy producer in the Dow, while financials like Goldman Sachs (GS) and tech giant Alphabet (GOOGL) weighed on the index [1].
Despite the volatility, the Dow finished August 1.4% higher, marking its fifth consecutive monthly gain [1]. The index started the month just above 52,500 and reached a record high near 54,750 on August 5, a surge of over 4% in three sessions, but subsequently experienced a steady decline, closing the month about 2.7% below the record high and 550 points above the 50-day EMA near 52,700 [1]. The four-week slide that followed the early August peak was not attributed to any single headline but coincided with rising long-term Treasury yields and expectations of tighter monetary policy [1].
Longer-dated Treasury yields increased again, with the 10-year yield near 4.73% and the 30-year yield above 5.20%, approaching a 19-year high set earlier in the month [1]. Federal funds futures now assign a roughly 60% probability to a quarter-point rate hike on September 16, up from about 35% before the previous Friday, indicating a significant shift in rate expectations [1]. The market's reaction to the military action was muted, with Central Command describing the strikes as limited and precise, and the index quickly recovering from its intraday low [1].
The persistent decline in the Dow since August 5 has been driven more by the repricing of interest rate expectations than by geopolitical events, reflecting the index's sensitivity to financials and capital goods sectors amid rising yields [1].
CONCLUSION
The Dow Jones Industrial Average ended August higher despite geopolitical tensions and rising Treasury yields. Market participants appear more focused on the prospect of tighter monetary policy than on recent military developments, with rate hike expectations driving recent declines.