In a significant downturn, the Dow Jones Industrial Average recorded its 10th consecutive loss on Wednesday, sliding by 1,123.03 points, or 2.58%, to close at 42,326.87. This marks the longest losing streak since an 11-day decline in 1974, according to CNBC. The index’s current trajectory is concerning, as it represents the steepest drop since August and is only the second time this year it has lost over 1,000 points in a single session.
The broader market reflected this trend, with the S&P 500 declining 2.95% to 5,872.16 and the Nasdaq Composite falling 3.56% to 19,392.69 as losses intensified towards the end of trading. The downward pressure on the market has been attributed to the Federal Reserve’s recent announcement, which indicated a slower pace of rate cuts moving forward.
On the same day the Federal Reserve announced a quarter-point reduction in its overnight borrowing rate to a target range of 4.25 to 4.5 percent, it alerted investors to expect fewer cuts in 2025—projecting only two reductions instead of the previously estimated four. Fed Chair Jerome Powell elaborated, stating, ‘The move to cut rates in recent months allows us to be more cautious as we consider more adjustments to our policy rate.’
This cautious outlook by the central bank has driven Treasury yields higher, with the 10-year yield climbing above 4.5%. Jeffrey Gundlach, CEO of DoubleLine Capital, commented, ‘Risk assets and a very highly valued stock market doesn’t like the idea that rate cuts are less likely on both sides of the mandate.’ He further remarked, ‘The market is pretty much in sync with that.’
The Dow’s losing streak began after reaching an all-time high above 45,000 on December 4. Since then, it has shed 6% of its value, a sharp decline that has led market analysts to reflect on the necessary adjustments needed in investor strategy.
Market strategist David Russell stated, ‘Good-bye punch bowl. No Christmas cheer from the Fed.’ He emphasized that with policymakers now anticipating higher inflation and lower unemployment in the upcoming year, maintaining a dovish stance is not a viable option. Russell concluded, ‘It’s a logical time to pause.’
Prior to Wednesday’s sell-off, losses in the Dow were partly attributed to a rotation out of traditional economy stocks into technology shares, a sector which is less represented in the index compared to broader market measures.
Despite these fluctuations, the Fed’s guarded approach has cast a shadow over the entire market, with the S&P 500 experiencing its most significant decline since August, reducing its 2024 gains to 23%.
