Dow plunges more than 1,100 points, marking its longest losing streak since 1974

New York
CNN
—

The Dow fell on Wednesday on a disappointing outlook from the Federal Reserve. In the process, the blue-chip index extended its losing streak to 10 days — the longest stretch since Gerald Ford was president.

The Dow Jones Industrial Average ended the day down about 1,123 points, or 2.6%, after the Fed indicated in a policy statement that it expects only two rate cuts in 2025, not the previously expected four. The Fed now expects inflation to remain stubbornly above its target range for longer than it originally expected.

The Dow has fallen for 10 straight days, the first time it has had such a long losing streak since Sept. 20 to Oct. 4, 1974, when the index fell for 11 straight sessions.

Until Wednesday’s plunge, the Dow had fallen as broader markets remained strong. The Dow has lost less than 6% in its long losing streak, a relative blip. Other indices have been at or near record highs before falling sharply on Wednesday. The S&P 500 fell 3% and the Nasdaq Composite fell 3.6%.

Investors expected the Fed to cut interest rates by a quarter point on Wednesday, which is exactly what the central bank did. But markets tumbled after the Fed said it expects just two rate cuts in 2025 – a signal that monetary conditions will remain tight. Stocks and bonds fell in response to the Fed’s “hawkish tapering,” said Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors.

On Tuesday, investors priced in a 98% chance the Fed would cut interest rates at its January meeting. But after Fed Chairman Jerome Powell’s press conference ended Wednesday, traders priced in just a 6% chance the central bank would cut rates at next month’s meeting, according to Fed Fund futures data.

“The market was overwhelmed by the likely future rate hike,” said Chris Zaccarelli, CIO at Northlight Asset Management.

UnitedHealth Group’s 15% drop this month has dragged the Dow down, in particular. The insurance giant’s sale began after the fatal shooting of UnitedHealthcare CEO Brian Thompson. Ironically, UnitedHealth was about 3.3% higher on Wednesday.

Nvidia, the US chip maker that joined the Dow in November, has also dragged down the 30-stock index. While Nvidia’s stock is up more than 180% this year, it has fallen in the past month, down about 5% and contributing to the Dow’s decline.

Despite the long slide, the Dow remains up 14% this year, up more than 5,000 points by 2024.

Markets initially rose after the election results, with investors breathing a sigh of relief that recounts and court battles were avoided. There has also been considerable enthusiasm for Trump’s promises to cut red tape and taxes.

This is a developing story and will be updated.