Despite the Dow’s nine-day losing streak, we are not in dire straits

On By Littum

Traders work on the New York Stock Exchange on December 17, 2024.

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This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, wherever they are. Do you like what you see? You can subscribe here.

What you need to know today

Dow falls for ninth day
On Tuesday, the Dow Jones Industrial Average lost 0.61%, marking a nine-day losing streak. The S&P 500 fell 0.39% and Nasdaq Composite retreated 0.32 per cent. Europe’s regional Stoxx 600 the index fell 0.42%, weighed down by a 1.4% drop in banking stocks. However, Europe’s technology stocks managed to defy the decline to add 0.61%.

What to expect from the Fed
The US Federal Reserve concludes its two-day interest rate meeting later on Wednesday. Despite sticky inflation and a robust labor market, the Fed is widely expected to cut interest rates by 25 basis points. But a CNBC poll of 27 respondents, made up of economists, strategists and fund managers, found that only 63% think it’s the right move for the Fed.

Nvidia and Broadcom merge
Nvidia shares fell 1.2% on Tuesday, and were deeper in correction territory, typically understood as a decline of 10% (or more) from a record high close. Broadcom’s rally also lost steam and its shares fell 3.9%.

Automakers, combine
Japanese car manufacturers Nissan engine and Honda engine is considering a merger, according to a Tuesday report by The Nikkei. Both companies also plan to bring Mitsubishi engines – where Nissan owns 24%, making it the top shareholder – under the holding company at the end. Both Honda and Nissan neither confirmed nor denied the report.

(PRO) Santa Rally, rush to the market tonight
The Santa Rally is a phenomenon where share prices rise on the last five trading days of the year and the first two in January. Once the Fed meeting ends today — and barring any unwelcome surprises — markets are ready to welcome Santa Claus and ring in the holidays, Bank of America said.

Bottom line

In February 1978, the Bee Gees’ song “Stayin’ Alive” was the top Billboard song of the month. It was also the anthem for the Dow Jones Industrial Average, which struggled with nine straight days of losses.

Almost fifty years on, the Dow is once again on a nine-day losing streak. To take another cue from Billboard’s chart, all investors want for Christmas is for the Dow to stop bleeding red.

That said, it’s not a huge blow to the 30-stock index despite the scary numbers.

The heaviest move on the Dow is UnitedHealthwhich has contributed to more than half of the index’s decline over the past eight sessions, CNBC’s Yun Li noted. The health insurer was rocked by the fatal shooting of its CEO Brian Thompson as well as a broader selloff in the industry.

Outside the Dow, the stock market remains buoyant. Despite the S&P and Nasdaq also sliding in their last trading session, both indexes are hovering near their record closes. This suggests that it is mostly the Dow constituents — “old economy” stocks like industrials, financials and consumer discretionary — that are abounding.

“Wall Street is waking up to the fact that a Trump presidency might not be as good for stocks as some people hoped,” said David Russell, global head of market strategy at TradeStation. “Financials and industrials jumped on his win, but now may have to face higher rates and trade uncertainty, and health care faces its biggest political risks in recent memory.”

Also, the losses for the Dow may be consecutive, but the rise is not that steep. The index is just 3.6% off its all-time high, and its 50-day moving average is still on the uptrend.

While it’s not as if the stock market is giving investors money for nothing, we’re still not exactly in trouble.

— CNBC’s Yun Li, Michelle Fox, Fred Imbert, Alex Harring, Adrian van Hauwermeiren, Brian Evans and Samantha Subin contributed to this report.