The Dow Jones Industrial Average is at risk of accomplishing an action it hasn't achieved in over half a century.
The Dow Jones Industrial Average is at risk of accomplishing an action it hasn't achieved in over half a century.
The Dow plummeted roughly 500 points, equating to a 1.2% decrease, following the Federal Reserve's revelation in a policy declaration that they foresee only two interest rate reductions in 2025, as opposed to the prior prediction of four. The Fed currently predicts that inflation will persistently surpass its designated threshold for a longer duration than initially envisioned. Less than 11% of investors believe the Fed will implement rate cuts during their January meeting, as per FactSet statistics.
The Dow has experienced a nine-day losing streak, marking the first time it has encountered such a continuous downturn since February 1978, during Jimmy Carter's presidency.
Surprisingly, the Dow has gone down whereas broader markets have remained robust. The Dow has only dwindled by 4.6% throughout its prolonged losing streak, which can be considered a minimal reduction. Other indexes have attained or approached record highs, but plummeted significantly on Wednesday. The S&P 500 declined by 1.4% and the Nasdaq Composite index decreased by 1.9%.
UnitedHealth Group's 15% decline throughout the month has significantly impacted the Dow, particularly. UnitedHealth Group's downslide started following the tragic shooting of their CEO, Brian Thompson. Ironically, UnitedHealth had climbed by around 3.4% on Wednesday.
Nvidia, a prominent US chipmaker that joined the Dow in November, has also impacted the 30-stock index adversely. While Nvidia's stock has soared by more than 180% this year, it has gone down by roughly 5% in the past month, contributing to the Dow's decline.
After the Fed's rate decision and announcement of economic projections, merely 11% of investors anticipate the Fed to impose rate cuts in January, according to FactSet data.
The Dow endured a losing streak this long for the last time in 1974, during which the index plummeted for 11 consecutive days between September 20 and October 4.
This remains an ongoing story and will be updated.
The Fed's prediction of only two interest rate reductions in 2025 has raised concerns in the economy, potentially affecting various businesses. Investors are now skeptical about the possibility of rate cuts during the January meeting, as only 11% believe it will happen.