Dow Jones had a better day Monday, recovering some of the losses it posted during the challenging week. However, the 30-stock index underperformed the broader market, which was helped by the rise of technology and semiconductor companies that are not represented in the Dow.
Down and up after a wobbly dawn
The Dow Jones Industrial Average (DJIA) climbed 366.19 points, or 0.71%, to close at 52,048.83 on September 21, 2026. However, not all of the participants in the market were as enthusiastic. While the S&P 500 climbed 1.49%, the Nasdaq Composite leapt 2.26% to a record close of 27,122.09.
The main reason is simple – investors are buying, but they seem to be particularly enthusiastic about the shares of technology and semiconductor companies.
On Monday, the Dow opened at 51,936.76 – more than 250 points above the close of the previous trading day. However, as the day started, optimism faded, sending the index lower to 51,747.68. Fortunately for the bulls, the situation changed throughout the day.
The selling pressure turned into buying, and the DJIA climbed to 52,128.58 at 2:50 p.m. EST. At that point, the index turned lower again, closing at 52,048.83 – 79.75 points below the daily high.
The DJIA range was 380.90 points on Monday. It shows that while investors were optimistic about the outlook, they still held some profits.
At 52,048.83, the index remains 4.9% below the 52-week peak of 54,744.33 and 15.5% above the 52-week low of 45,057.28. So, while a convincing rebound is in place, the Dow is still below the key levels.
One positive sign for the bulls is that on Monday, the index climbed back to levels seen on Friday. It means that the weak week ended on a stronger note.
Crude helps to explain the rebound
The main reason why the Dow moved higher on Monday can be found in crude oil. According to Reuters, West Texas Intermediate (WTI) dropped by 4% – 5% in a day, hitting the lowest level in more than a month. Meanwhile, Brent crude oil fell below $100 a barrel for the fourth consecutive day.
Crude oil prices had risen to $105 during the previous week, and the increase was worrying for financial markets. Higher oil prices are usually associated with higher costs for businesses and consumers. Unless companies can pass the extra costs to consumers, the profits of businesses involved in transportation and manufacturing will be under pressure.
Moreover, a rise in oil prices tends to increase inflation and put pressure on the Federal Reserve to raise interest rates.
However, on Monday, traders welcomed the news that oil prices were ready to drop. One reason was the speculation that the U.S. and Iran would resume talks. Meanwhile, Saudi Arabia’s exports of oil have increased, signaling potential supply growth.
The drop in oil prices helped many stocks represented in the Dow, including industrial companies and consumer discretionary firms that are sensitive to higher interest rates. However, lower hydrocarbon prices usually hit oil producers and drillers the hardest.
Lower Treasury yields contribute to the rebound
Meanwhile, another factor that contributed to the rebound is lower Treasury yields. The yield of the 10-year Treasury note was at 5.006% on Friday after peaking above 5% during the week. On Monday, the yield fell below 5% as investors became more confident that the Federal Reserve would not raise rates again in 2026.
On Monday, lower Treasury yields contributed significantly to the rebound of the Dow. This happened because many of the companies represented in the index are sensitive to changes in interest rates. Moreover, the ability of large banks to lend to businesses and consumers is vitally important to the economy.
The higher the rates, the more expensive it is for firms and families to service their debt. Moreover, higher yields tend to reduce the demand for housing and cars, reducing the overall consumption of the economy. However, as the rates fall, the opposite happens.
The move below 5% in Treasury yields does not mean that the situation has improved significantly. However, if oil prices continue to fall and inflation eases, the outlook for the companies represented in the DJIA will improve. Moreover, the Fed raised its key interest rate to 3.75%-4% per annum on September 16. The market will closely watch the debate over further rate hikes.
Hope for trade deal improves the outlook
On Sunday, U.S. Treasury Secretary Scott Bessent said that weekend talks with Chinese counterpart He Lifeng were “productive.” The meeting was held ahead of the summit between Presidents Donald Trump and Xi Jinping on September 24.
The prospect of improved trade relations has positively impacted the market, as many of the companies represented in the Dow are international traders. For example, many industrial companies rely on the stability of global supply chains. In addition, the U.S. pharmaceutical and technology companies sell their goods and services to Chinese firms.
Thus, an improvement in trade relations means reduced risks for the companies represented in the Dow index. In general, the market is optimistic about a deal, but it is unlikely to happen soon. Moreover, investors understand that even if a deal is reached, there will still be potential areas of disagreement.
Why did Nasdaq outperform Dow?
The abovementioned factors explain why the Dow had a positive day. However, why did the Nasdaq outperform the Dow by a significant margin? Why did the 30-stock index underperform the broader market on Monday?
The main reason is the composition of the indices. The ones led by technology and semiconductor stocks outperformed in September 2026. This trend explains the strong performance of such companies as Meta Platforms, Advanced Micro Devices, Intel, and Qualcomm. However, these firms are not represented in the DJIA.
Nvidia is the only company in the Dow that is involved in semiconductor manufacturing. Therefore, the DJIA could not benefit from the strong performance of the entire sector. In addition, the DJIA is a price-weighted index, so a small number of large companies significantly affect the movement of the index.
As a result, the Dow can have a considerable gap with the S&P 500 and Nasdaq on days when technology stocks rise strongly. Another factor that influenced the different performance of the indices was the weakness of oil-related companies on Monday. They were among the sellers in the basket of 30 stocks, thus preventing the Dow from outperforming the broader market.
A difficult week for the Dow
September 21 was a positive day for the Dow, but it was a challenging week for the blue-chip index. In particular, on September 18, the DJIA closed down 1.7% – the biggest decline in 61 days and the third consecutive week of losses. On Friday, September 18, the index closed at 51,682.64, down 59.98 points, or 0.18%, from the previous day’s close.
On Friday, bank stocks were among the losers as continued higher Treasury yields put pressure on the banks’ net interest margins. On September 18, Bank of America shares dropped 0.8%, while Goldman Sachs fell about 1%. Thus, the worsening credit environment for consumers and businesses negatively affected the banks’ performance.
September 2026 was a tough month for financial markets in general. In particular, the Federal Reserve, the Bank of England, and the Bank of Japan all cut rates. At the same time, oil prices jumped to new highs amid rising security concerns in the Middle East.
U.S. Treasury yields climbed to their highest level since 2007 during the week. Moreover, the markets were affected by the so-called quadruple witching, as stock options, index options, stock futures, and index futures expired at the end of the week.
Such a large number of expirations often lead to increased market volatility. Therefore, it was difficult for investors to determine whether the rapid drop in shares during the week was real or artificial.
However, on Monday, many investors returned to the stock market. In particular, investors bought shares of companies represented in the DJIA, pushing the index higher. As a result, on Monday, the Dow closed higher on stronger hopes for a trade deal, lower oil prices, and softer Treasury yields.
Why are oil prices and Treasury yields so important for the Dow?
Compared to the Nasdaq, the Dow is a broader indicator that reflects changes in the overall economy. The companies represented in the DJIA are highly sensitive to changes in interest rates, employment data, commodity prices, and the state of the economy in general. Therefore, the influence of higher oil prices on the economy is reflected in their impact on the companies represented in the Dow.
For example, soaring oil prices lead to higher transportation costs for businesses. As a result, companies’ profits are squeezed, and their shares are sold. At the same time, rising energy prices cause consumers to spend more on transportation than expected. In addition, higher commodity prices lead to higher inflation, and the Federal Reserve responds by raising interest rates.
All of the abovementioned factors tend to reduce the value of the DJIA. As oil prices fell, many of the abovementioned effects have been mitigated. As a result, businesses saw profits grow, and consumers found themselves with more money to spend.
Lower Treasury yields have a similar impact on the Dow. The situation is complicated by the fact that the abovementioned bond yield decline may be related to both slowing inflation and a decline in the health of the economy. If the rate decline reflects decreasing inflation, this will benefit the stock market. On the other hand, if it reflects a bearish economic outlook, this will be a problem for stock prices.
Global markets bounced higher
Not only the U.S. stock market, but also Asian and European markets also moved to the upside on Monday.
In particular, Hong Kong’s Hang Seng Composite Index rose 1.18%, while the Shanghai Composite Index climbed 0.97%. India’s Sensex also climbed 0.76%. Meanwhile, Japan’s Nikkei 225 was closed due to a public holiday.
In Europe, stocks also rose on Monday. The German DAX climbed 1.07%, and the French CAC 40 gained 0.92%. The UK FTSE 100 closed at 10,739.01, up 0.75%.
So, the abovementioned factors affected not only the Dow but also the global markets. However, even though the outlook has improved, investors should remain cautious. A geopolitical surprise in the Middle East or a disappointing outcome of the U.S.-China meeting could quickly spoil the mood.
What to watch for next
On Tuesday, traders will be watching for three main factors that will shape the future of the stock market and the economy.
First of all, it will be interesting to see whether oil prices will continue to fall. If they do, it will ease concerns about inflation and be a positive sign for the economy. At the same time, a rapid rise in hydrocarbon prices will trigger another round of selling.
Another critical factor will be whether the Federal Reserve is preparing to raise interest rates again soon. On Monday, investors expected another rate increase, but so far, it is unclear whether this will happen.
Finally, it will be interesting to see what happens with trade negotiations between the U.S. and China. In particular, markets are waiting for news on whether the sides will soften tariffs and ease trade tensions.
Such information will significantly affect the prices of many companies represented in the Dow. In addition, investors will also be interested in how the meeting between Trump and Xi Jinping will develop. Even if no consensus is reached, even modest improvements in trade relations could provide a positive impulse to growth.
Meanwhile, investors are also waiting for news about Russia’s possible extension of its diesel fuel export ban. This information also affects the stock market as it is another factor influencing the price of oil.
Hope for the best, prepare for the worst
The Dow’s 366-point rebound on Monday is a positive sign. The index moved higher after three consecutive weeks of losses. Crude oil prices fell, relieving many companies and investors who feared inflation. Softer Treasury yields also benefited the companies represented in the Dow.
However, even though the outlook has improved, the situation for the markets is not ideal. The DJIA closed below its 52-week peak, and the Nasdaq and S&P 500 continue to outperform the Dow.
Moreover, on Monday, the bounce was driven mainly by speculation. While oil prices fell, the rebound is unlikely to be enough to convince investors that the worst is over. If oil prices rise again and Treasury yields continue to climb, the Dow will suffer additional losses.
Therefore, as always, it will be crucial to watch for changes in oil prices, Treasury yields, and trade talks. If these factors continue to move in the right direction, the Dow will be able to continue its rebound. However, if they move in the opposite direction, the bears will be quick to react.
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