Dow Jones Faces Longest Losing Streak Since 1978 Amid Market Volatility | Image Source: Images.pexels.com
NEW YORK, December 16, 2024 – The average industrial Dow Jones scored its ninth consecutive day of decline on Tuesday, falling from 267.58 points, or 0.61%, to nearly 43 449,90. This long series of losses, the longest of the index since February 1978, comes in the middle of a mixed performance on the American stock markets, with the decrease of S; P 500 and Nasdaq Composite remaining close to high records. Plagaamp S; P 500 fell by 0.39% to 6,050,61, while the Nasdaq composite fell by 0.32% to 20,109.06.
Despite Dow’s struggles, the market remains resilient. Slamp; P 500 reached a new peak on 6 December and is less than 1% below this peak, while Nasdaq reached its last record early this week. According to analysts, Dow’s decline reflects the turnover of investors in the value shares, which dominate the index, and in technological actions, which have increased since the November post-election meeting.
Rotation in technical actions
After Donald Trump’s re-election, markets first recorded profits in industrial and financial shares, key sectors within the Dow. However, a recent change in stocks of technology and semiconductors has left the fight against value-based names. Jeff Kilburg, CEO of KKM Financial, said, “Mag 7 performance hunters take a final sprint by the end of 2024, leaving the rest of the S actions involved in the sidelines and cutting the Dow on the edge.”
Interestingly, even technological actions within the Dow have not been immune. Nvidia, who joined the index in November, entered correctional territory earlier this week, despite the strength in the broader technology sector. Meanwhile, other important technical names, such as Tesla, remained strong, although Broadcom dropped by 3.9% on Tuesday.
David Russell, Global Market Strategy Manager at TradeStation, attributed some of the market change to the concerns surrounding Trump’s presidency. “Wall Street is awakening the fact that a Trump presidency may not be as big for the actions that some people expected,” Russell said. He added that higher interest rates, trade uncertainties and political risks to the health sector affect investor sentiment.
Fed Policy and Increasing Treasury Performance
The next Wednesday decision on the Federal Reserve interest rate is also an important factor that motivates investor prudence. According to the CME Group Fed Watch tool, traders currently see a 95% probability of a fourth point reduction. However, there is still a concern that central bank actions may exacerbate inflation or fuel a stock market bubble. “You probably have to see lower rates and inflation continues to cooperate for the rest of the market to make a return,” said Mona Mahajan, Edward Jones’ senior investment strategist.
Increase Treasury performance added to the pressure. The 10-year Treasury return increased by about 20 basis points in December to 4.39% compared to Tuesday, creating winds for interest-sensitive sectors. Slamp of equal weight; P 500 has underdeveloped its capital-weighted counterpart, indicating significant weakness in small populations and non-technological sectors.
The November report on the most anticipated retail sales further complicated the story. While strong evidence indicates that consumers are resilient, it is also a concern that possible reductions in Fed rates may be premature. Analysts point out that persistent inflation may further limit the Fed’s ability to facilitate monetary policy.
Low values and industrial stocks
Financial, energy and industry, which took place immediately after Trump’s victory, fought in December. Financial resources in Slamp; P 500 has declined 4.4% since the beginning of the month, while energy and utilities have worsened. In the Dow, shares such as Caterpillar, Sherwin-Williams and Goldman Sachs contributed to the decline, indicating greater investor hesitation in terms of value and cyclical names.
UnitedHealth Group has played a very important role in Dow’s recent struggles. The shares of the health insurance company represented approximately 750 points of the 1.564-point decrease in the index during the current series of losses. The company has been subject to a bi-partite review in Congress about its pharmaceutical benefit management activities, while the recent confusion of leadership following the murder of Brian Thompson, CEO of his insurance sector, has further affected investor confidence.
Brian Allen, Chief Investment Officer of CS McKee, noted that Dow’s narrow composition was a key challenge. ”One of Dow’s concerns is how narrow it is,” says Allen, noting that idiosyncratic factors, such as the decline in health and health, can have a disproportionate impact on the 30-stock index.
Market failure and investment
The scope of the market has also deteriorated considerably. As of Tuesday, the number of shares in the Slamp is decreasing; P 500 surpassed the winners on the 12th consecutive day, marking the longest of such a series since 1999, according to Dow Jones Market Data. In addition, only 40.6% of Slamp’s shares; 500 P were registered above their 50-day moving average, the lowest level since May.
Despite these challenges, analysts believe there is reason to be optimistic. The U.S. economy grew to an annualized rate of over 3% in the third quarter, and Wall Street continued to harass business profit growth in 2025. “Investors have many reasons to remain optimistic, especially as valuations of value stocks and small layers become increasingly attractive,” Mahajan said.
In the future, Mahajan expects freight sectors, such as small layers and value shares, to recover in 2025 as the market recalibrates. “We could see a rotation in these segments as they reach wider market gains,” he added.
Investors will closely follow the Federal Reserve’s political statement and updated economic projections on Wednesday for new signs of interest rates and inflation. Although uncertainty remains, analysts agree that the current divergence between technology stocks and the rest of the market will be a key issue for the new year.
As investors weigh on risks and opportunities, Dow’s historical set of losses highlights the challenges facing a passionate market, with uncertainty in interest rates, sector rotations and strong equity leadership.
About The Author
