The Dow's Recent Decline: Chevron and Boeing in the Crosshairs of Rising Rates

The Dow Jones Industrial Average's decline in June 2025 was a stark reminder of the fragility of industrial and energy stocks in a rising-interest-rate environment. While the index's broader struggles were fueled by Trump-era tariffs and global trade tensions, two of its most influential components—Chevron and Boeing—highlighted the sector-specific risks and opportunities shaping long-term value.

Boeing: A Tale of Regulatory Headwinds and Capital Constraints

Boeing's recent performance has been a drag on the Dow, with its shares plummeting 6.41% over three days in June 2025. The culprit? Delays in certifying the 737 MAX 7 and 10 models due to unresolved issues with the engine de-icing system. These setbacks, coupled with the Federal Aviation Administration's production caps imposed after a 2024 mid-air panel blowout, have eroded investor confidence.

In a rising-interest-rate environment, capital-intensive industries like aerospace face dual challenges: higher borrowing costs and reduced access to liquidity. Boeing's 2025 Commercial Aircraft Finance Market Outlook reveals a sector grappling with tighter financing. While lessor financing and export credit agencies (ECAs) remain critical for aircraft deliveries, rising rates could amplify refinancing costs for airlines and manufacturers alike. For Boeing, this means navigating a landscape where pricing competition for stronger credits intensifies, while higher-risk projects face scrutiny.

Yet Boeing's long-term fundamentals remain intact. Its 34.1% year-to-date stock gain (as of June 2025) and a diversified order book suggest resilience. However, the company's reliance on external financing for production and its exposure to regulatory delays make it a high-risk bet in a volatile rate environment.

Chevron: Energy's Dividend Aristocrat in a High-Cost World

Chevron, by contrast, has shown more stability. Its stock rose 10% in 2025, aligning with its three-year average return of 8.8%. Despite a bearish “death cross” signal in August, Chevron's disciplined capital allocation and robust free cash flow ($6.1 billion in 2025) position it as a defensive play.

The energy sector's vulnerability to rising rates is twofold: higher debt servicing costs and sensitivity to oil price swings. Chevron's debt ratio of 16.8% (as of Q2 2025) is manageable, but its $14.5–$15.5 billion capex budget for 2025—focused on U.S. upstream projects and low-carbon initiatives—requires careful execution. The company's $2–$3 billion in projected cost reductions by 2026 and its 38-year dividend growth streak (earning it “dividend aristocrat” status) offer a buffer against rate-driven headwinds.

Chevron's strategic investments in carbon capture, hydrogen infrastructure, and renewable natural gas also position it to adapt to a low-carbon future. This dual focus on traditional energy and emerging technologies could insulate it from long-term sector declines, even as oil markets face oversupply risks.

Sector-Specific Risks and Long-Term Value

Rising interest rates amplify sector divergence. Industrial firms like Boeing, reliant on capital-intensive projects and sensitive to regulatory delays, face sharper volatility. Energy stocks like Chevron, while exposed to commodity price swings, benefit from strong cash flows and a diversified capital structure.

For investors, the key lies in balancing these risks. Boeing's long-term value hinges on resolving production bottlenecks and securing favorable financing terms. Chevron's appeal lies in its defensive characteristics—consistent dividends, cost discipline, and a strategic pivot to low-carbon energy.

Investment Takeaways

1. Boeing: A speculative bet for those comfortable with regulatory and financing risks. Monitor the FAA's certification timeline and the company's ability to secure cost-effective financing.
2. Chevron: A defensive play in a high-rate environment. Its dividend yield and capital discipline make it a compelling choice for income-focused investors.

In a world where rising rates and geopolitical tensions dominate, Chevron's resilience and Boeing's innovation will be tested. For now, Chevron offers a safer harbor, while Boeing's potential remains tied to its ability to navigate a turbulent skies.