The stock market entered the history books on Tuesday with its first nine-day losing streak since 1978. The 30-stock Dow Jones Industrial Average slid 267.58 points, or 0.61%, to settle at 43,449.90. The Nasdaq Composite fell 0.32% to end at 20,109.06, while the S&P 500 lost 0.39% to close at 6,050.61.
The Dow’s losing streak began after it closed above 45,000 for the first time ever earlier in the month. This anomaly comes at a time when the broader market is performing well. The S&P 500 hit a new high on Dec.
6 and sits less than 1% from that level, while the Nasdaq set a record on Monday. Driving the Dow’s losses has been a rotation into technology stocks and out of some of the more traditional stocks that surged in November following the reelection of President Trump. Apple, a new tech member of the Dow that joined in November, has also struggled despite the tech sector’s recent gains.
David Russell, global head of market strategy at TradeStation, said, “Wall Street is waking up to the fact that a Trump presidency might not be as great for stocks as some people hoped. Financials and industrials jumped on his win but now may have to face higher rates and trade uncertainties, and healthcare faces its greatest political risks in recent memory.”
Concerns are also growing around the Federal Reserve’s upcoming interest-rate decision on Wednesday. Traders are pricing in a 95% chance of a quarter-point cut.
However, some investors and economists worry that the central bank could be making a mistake, potentially risking a stock market bubble or sparking more inflation. Jeff Kilburg, CEO of KKM Financial, said, “The Mag 7 performance chasers are taking one last sprint towards the 2024 year-end, leaving the rest of the S&P 500 stocks on the sidelines and kicking the Dow to the curb.”
November’s retail sales figure came in better than economists expected, adding to concerns that the Fed may be taking unnecessary action.
Dow’s longest losing streak factored
The Dow Jones Industrial Average notched its longest daily losing streak in 50 years when it fell for a tenth straight session on Wednesday. The drop came after the Federal Reserve scaled back its forecast for interest rate cuts amid uncertainty about the path of inflation in the coming year. The declines over the past nine days were compounded by the troubling events in the health care sector.
The shocking incident involving the killing of a UnitedHealth Group executive drew negative attention to the industry, impacting stocks within the sector. UnitedHealth Group shares lost more than 20% of their value following the incident. The company came under intense scrutiny, and this was followed by significant legislative and political developments aimed at restructuring the healthcare system.
Shares of other healthcare giants like CVS Health and Cigna also tumbled significantly. Before the slump, UnitedHealth had a stock price of $610, making it the priciest stock in the Dow and thus the index’s most influential component. The Dow’s structure means that higher-priced stocks have a more significant influence on the index’s performance.
Nvidia, another key component, has also weighed down the Dow. The technology giant, which was recently added to the index, has fallen in nearly every trading session since December 4th. Recent geopolitical issues and Federal Reserve’s interest rate projections added to the downward pressure.
The Dow’s latest losing streak has seen it slump 6%, contrasting with more modest losses of 3.5% and 1.8% for the S&P 500 and Nasdaq Composite, respectively. The Fed’s latest policy moves sparked a broad sell-off across the market, erasing mid-day gains and extending the Dow’s historic losing streak. This downturn marks a significant event in market history, reflecting the interconnectedness of global events, policy decisions, and individual company fortunes in shaping market trajectories.
