Chart of the Week: Why the Dow is diving amid US-Iran conflict

• Sharp reversal in Dow performance: The Dow Jones Industrial Average shifted from the second-best-performing US index (+1.9%) before the US–Iran war 2026 to the second-worst performer (-4.9%) since the conflict began, reflecting a significant deterioration in market sentiment.
• Financial sector exposure driving weakness: Heavy weighting in financial stocks, particularly Goldman Sachs, has amplified downside pressure as rising oil prices increase stagflation risks and reduce expectations of interest rate cuts by the Federal Reserve.
• Key technical level in focus: The Dow is approaching 46,330 support near its 200-day moving average. A break below this level could trigger further declines toward 45,735 and 44,975, while a recovery above 48,120 resistance would negate the bearish outlook.

The Dow Jones Industrial Average (DJIA) has undergone a remarkable change of fortune in the past four weeks.

Before the onset of the US–Iran war on 28 February 2026, the Dow Jones Industrial Average was the second-best performing US equity benchmark, gaining +1.9% between 1 January and 27 February 2026. It trailed only the Russell 2000, which led with +6.1%, while outperforming the S&P 500 (+0.5%) and the Nasdaq-100 (-1.2%).

However, the performance landscape has reversed sharply since the conflict began. From 27 February to 12 March 2026, the Dow Jones Industrial Average has slipped to become the second-worst-performing US index with a loss of 4.9%, and the Russell 2000 is the worst (-5.8%), versus the S&P 500 (-3.6%), and the Nasdaq 100 (-2.3%).

Why did the DJIA fare the worst in the current period?

Banking/financial stocks are the main trigger for such underperformance in the DJIA.

The Financials sector is the top sector in the DJIA, with a weightage of around 26%[1], and Goldman Sachs is the top price-weighted component stock in the DJIA with a weight of 10.3%[2] as of Friday, 13 March 2026.

[1]https://www.spglobal.com/spdji/en/indices/equity/dow-jones-industrial-average/#overview

[2] https://www.slickcharts.com/dowjones

The recent swift jump in oil prices due to global oil supply disruption arising from the US-Iran war has increased the risk of a stagflation environment, in turn reducing the odds of interest rate cuts by the US Federal Reserve in 2026.

Bear flattening in the US Treasury yield curve may trigger further potential downside in the DJIA (see Fig. 1).

The US Treasury market has adjusted to rising stagflation risks and expectations of a less dovish Federal Reserve. From 27 February 2026 to 13 March 2026 , the 2-year US Treasury yield has climbed by 35 basis points (bps), outpacing the 33 bps increase in the longer-term 10-year yield.

As a result, the US Treasury yield curve (10-year minus 2-year) has undergone a bear flattening, where short-term interest rates rise faster than long-term yields. Such a shift typically signals tighter financial conditions, which can weigh on economic growth and pressure bank profitability.

The price actions of the US Wall Street 30 CFD index (a proxy of the Dow Jones Industrial Average futures) have given up its earlier gains of 4% from Monday, 9 March 2026, to Wednesday, 11 March 2026, as it staged a bearish reaction at the 48,120 key medium-term pivotal resistance (see Fig. 2).

A break and a daily close below the 46,330 key support (also close to the 200-day moving average) may trigger another bearish leg to expose the next medium-term supports at 45,735 and 44,975 (also a Fibonacci extension).

On the flip side, clearance and a daily close above 48,120 invalidates the bearish scenario for the next intermediate resistances to come in at 48,810 and 49,844.