Dow Experiences Historic Decline
The Dow Jones Industrial Average fell sharply on Wednesday, dropping over 1,123 points (2.6%). This marks the longest losing streak since 1974, extending its slide to 10 consecutive days.
The plunge came after the Federal Reserve’s policy statement indicated a slower pace of interest rate cuts in 2025, with only two cuts now forecasted instead of the anticipated four. This reflects ongoing concerns about stubbornly high inflation, which remains above the Fed’s target range.
A Losing Streak Not Seen in Decades
The last time the Dow experienced a 10-day losing streak was from September 20 to October 4, 1974, during the economic turmoil under President Gerald Ford. However, despite the prolonged downturn, the Dow’s decline of less than 6% is considered moderate compared to its overall performance this year.
Market-Wide Declines
Other key indexes also fell significantly:
- The S&P 500 dropped by 3%.
- The Nasdaq Composite fell by 3.6%.
These declines followed the Fed’s decision to cut rates by a quarter point, a move widely expected by investors. However, markets reacted negatively to the Fed’s “hawkish cut” and cautious outlook for 2025.
Interest Rate Expectations Shake Markets
Investor sentiment shifted dramatically after Fed Chair Jerome Powell’s press conference:
- Prior to the meeting, there was a 98% chance of another rate cut in January.
- After Powell’s statements, this dropped to just 6%, according to Fed funds futures data.
“The market was underwhelmed by the likely future path of interest rates,” said Chris Zaccarelli, CIO at Northlight Asset Management.
Stocks Dragging the Dow Lower
Several key stocks contributed to the Dow’s decline:
- UnitedHealth Group: Its 15% drop this month significantly impacted the index, though the stock rose by 3.3% on Wednesday.
- Nvidia: While the chipmaker’s stock has surged over 180% this year, it fell by 5% in the past month, adding to the Dow’s losses.
Dow’s Resilience Despite Challenges
Despite the historic losing streak, the Dow remains 14% higher in 2024, gaining more than 5,000 points over the year.
Election Optimism and Economic Outlook
Markets initially rallied after the election results, driven by optimism over promises to cut taxes and reduce regulations. However, recent concerns about tight monetary conditions and persistent inflation have dampened investor confidence.
