Dow Jones Faces Longest Losing Streak Since 1978 Amid UnitedHealth Plunge

The Dow Jones Industrial Average (DJIA), one of the most closely watched stock market indices, has entered its longest losing streak in over 46 years. As of December 17, 2024, the Dow has fallen for nine consecutive sessions, marking a cumulative decline of 3.6%. This rare and sustained downturn has drawn attention from investors, analysts, and policymakers alike. While the broader markets, including the S&P 500 and Nasdaq Composite, remain near record highs, the Dow’s underperformance underscores the struggles of its price-weighted components and the sectors they represent.

The steep decline of UnitedHealth Group has been the primary drag on the Dow during this losing streak. Since December 4, the health insurer’s stock has plummeted by nearly 21%, erasing more than $90 billion in market value. This dramatic drop was triggered by the unexpected shooting of CEO Brian Thompson outside an investor conference in New York City. The tragedy not only caused immediate market unease but also raised broader concerns about leadership stability at one of the largest healthcare companies in the world.

Beyond UnitedHealth, other Dow components have also contributed to the index’s decline. NVIDIA Corporation, a key player in the technology sector, has fallen 10% over the past nine sessions. The company, once the darling of Wall Street for its dominance in AI and graphics processing units (GPUs), has seen its stock price slide amid fears of slowing demand for AI-related products. Broadcom, another tech giant, has also seen its rally lose steam, with its stock declining by 3.9%.

Despite the overall negative trend, some Dow components have bucked the losing streak. Boeing Co., for instance, has risen by 9.3% over the past nine sessions, making it the best-performing stock in the index. The aerospace giant has benefited from a surge in new aircraft orders and optimism about its recovery from recent production setbacks. Other notable gainers include mega-cap tech names like Amazon, Apple, and Microsoft, which have rallied thanks to strong earnings and robust demand for their cloud and AI-related offerings. However, their influence on the price-weighted Dow is limited compared to the capitalization-weighted S&P 500 and Nasdaq Composite.

The Dow’s underperformance stands in sharp contrast to the broader market. The S&P 500 and Nasdaq Composite, which are both cap-weighted indices, remain near record highs. The so-called “Magnificent 7” tech stocks—Amazon, Apple, Microsoft, Meta, Nvidia, Tesla, and Alphabet—have collectively climbed by approximately 8% over the past nine trading sessions, driving much of the gains in these indices.

Adding to the market’s uncertainty is the Federal Reserve’s upcoming rate decision. The central bank is widely expected to lower interest rates by 25 basis points, marking a potential pivot from its tightening cycle. While lower rates could provide relief to interest-sensitive sectors, opinions remain divided on whether this move is appropriate given persistent inflation and a resilient labor market. A recent CNBC survey of 27 economists, strategists, and fund managers found that only 63% believe a rate cut is the right decision at this time.

The Dow’s current losing streak evokes memories of February 1978, when the index last endured a nine-session decline. Back then, the U.S. economy was grappling with stagflation—a toxic mix of high inflation, slow growth, and rising unemployment. While the economic backdrop in 2024 is markedly different, with inflation moderating and the labor market remaining strong, the Dow’s struggles serve as a reminder that market sentiment can shift quickly in response to unexpected events and sector-specific challenges.

Despite the Dow’s recent struggles, analysts remain cautiously optimistic about the broader market’s prospects. The index’s 3.6% decline over nine sessions, while significant, pales in comparison to the corrections seen during past bear markets. Moreover, the Dow’s 50-day moving average remains in an upward trend, suggesting that the recent losses may be more of a consolidation phase than the start of a prolonged downturn.