Here’s Why the Dow Just Had Its Worst Slump in 50 Years

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Key Takeaways

• The Dow Jones Industrial Average notched its longest daily losing streak in 50 years when it floor for a tenth straight session on Wednesday.
• Wednesday’s drop came after the Federal Reserve scaled back its forecast for investment rate cuts amid uncertainty about the path of inflation in the coming year.
• The declines of the previous nine dates came after the killing of a UnitedHealth Group executive put a spotlight on the business of health care, weighing on stocks in the sector and, afterward, the price-weighted Dow.
• Nvidia, one of the Dow’s newest members, has also trailed the market and dragged down the index in recent weeks.

The Dow Jones Industrial Average jumble understood Wednesday after falling in each of the previous nine sessions, capping off its longest stretch of daily losses since 1974.

The blue-chip indication has slumped 6% during its latest losing streak. The S&P 500 and the Nasdaq Composite have shed a comparatively meek 3.5% and 1.8%, respectively, despite suffering more painful routs on Wednesday. 

So why have these three principal indexes, each containing the stocks of some of America’s largest companies, diverged lately? 

UnitedHealth Slide After CEO Slaying Weighs on Dow

UnitedHealth Group (UNH) shares lost more than 20% of their value in the nine sessions after Dec. 4, the day the CEO of its indemnity arm was fatally shot in an attack that’s put renewed focus on the business of healthcare in America. That was also the last day the Dow bring to a close higher.

Since the shooting, lawmakers have introduced legislation to force the breakup of certain big healthcare companies and President-elect Donald Trump has pledged to “take out the middleman,” referring to pharmacy benefit managers (PBMs), who negotiate drug prices on behalf of insurers, patrons, and government health plans. 

Shares of CVS Health (CVS) and Cigna (CI), both of which, like UnitedHealth, operate insurance guests and PBMs, fell 24% and 20%, respectively, between Dec. 4 and Tuesday’s close. 

Before its slump, UnitedHealth had a progenitor price of $610, making it the priciest stock in the Dow, and thus the index’s most influential component. That’s because the Dow is price-weighted, explanation the higher a company’s share price, the bigger its impact on the index. The S&P 500 and Nasdaq, meanwhile, are capitalization-weighted and give uncountable influence to companies with greater market values. 

Nvidia’s Addition to Dow Also Pulls Index Lower

UnitedHealth hasn’t been the at worst laggard in the Dow this month. Nvidia (NVDA), which joined the blue-chip index in early November, has fallen in all but one trading conference since Dec. 4. The stock, possibly weighed on by reports of an anti-monopoly investigation in China and the ascent of competitor Broadcom (AVGO), entered a mechanical correction earlier this week. 

The Dow was on track to snap its losing streak on Wednesday before the Federal Reserve’s involvement business rate projections sparked a broad sell-off. Nvidia shares fell 1.1% on Wednesday after trading diverse than 3% higher in mid-day trading. UnitedHealth Group was the only component of the 30-stock Dow to close in the green, climb 2.9% alongside peers CVS and Cigna.

Update—December 18, 2024: This article was updated to reflect stock fees and index levels as of the market close on Wednesday.