What happened? The Dow Jones Industrial Average has fallen for nine consecutive days, marking its longest losing streak since 1978!

The Dow Jones Industrial Average has been on a continuous decline recently, gapping down at the open on Tuesday and dropping over 380 points during the day, with an intraday decline of up to 0.87%. By the close on Tuesday, the Dow had fallen more than 260 points, marking its ninth consecutive trading day of decline, setting a record for the longest losing streak since 1978. The Dow briefly surpassed the historical high of 45,000 points at the beginning of this month, but began this prolonged decline on the second trading day thereafter.

The eight consecutive days of decline that ended on Monday is the longest losing streak for the Dow since 2018. According to FactSet data, the Dow experienced 11 consecutive days of decline in 1974, and apart from that, the Dow Jones Industrial Average has never seen a decline of 10 days or longer.

However, it is important to note that while the number of consecutive declines for the Dow can be recorded in history, the overall decline remains moderate, with Tuesday's low point being less than a 4% pullback from the historical high at the beginning of December.

In fact, the Dow's exceptionally poor performance comes against the backdrop of a strong overall trend in U.S. stocks, creating a stark contrast. The Nasdaq Composite Index just reached a new historical high on Monday, and the S&P 500 Index is only about 1% away from its historical peak.

Reasons for the Dow's Decline

The driving force behind the Dow's decline is that funds are flowing out of stocks in some traditional economic sectors and moving towards technology stocks. These traditional economic stocks dominate the Dow, unlike the Nasdaq, where technology stocks are predominant. After Donald Trump won the U.S. presidential election, traditional economic stocks surged in November, but have recently shown signs of weakness. Nevertheless, the Dow is still about 3.5% higher than it was on election day.

Industry insiders point out that part of the reason for the profit-taking in non-tech stocks is the upcoming Federal Reserve interest rate decision on Wednesday. According to the CME Group's FedWatch Tool, traders expect a 97% probability of a 25 basis point rate cut at the December meeting.

However, some investors and economists are concerned that the Fed's rate-cutting measures could be a mistake, potentially leading to a bubble in the U.S. stock market or a resurgence of inflation. Data released on Tuesday showed that U.S. retail sales in November exceeded economists' expectations, further raising concerns about the Fed possibly taking unnecessary actions. Due to such concerns, the market generally expects that the Fed will not cut rates in January next year.

It is also worth mentioning that Nvidia joined the Dow in November. As a new technology component of the Dow, Nvidia has faced difficulties despite the strong performance of the tech sector recently, having pulled back over 10% from its peak on Monday, entering a technical correction zone. Nvidia fell again on Tuesday. Analysis from Wall Street Insight mentioned that the AI industry is undergoing a "paradigm shift," as AI large models transition from the pre-training phase to the logical reasoning phase, with dedicated chips represented by ASICs potentially gradually replacing general-purpose chips represented by GPUs, leading to Nvidia's recent sluggish performanceIn addition, UnitedHealthcare Group is one of the important reasons for the recent decline in the Dow Jones Industrial Average. The insurance giant has lost 18% of its market value so far this month, with the sell-off beginning after the news of CEO Brian Thompson's murder. On Monday, UnitedHealthcare's stock price fell again, influenced by Trump's vow to "eliminate" intermediaries in the healthcare industry.

How does Wall Street view this?

David Russell, Global Market Strategist at TradeStation, stated: "Wall Street is gradually realizing that Trump's re-election may not be as beneficial for the stock market as some had anticipated. The financial and industrial sectors rose due to Trump's election, but now they may face higher interest rates and trade uncertainties, while the healthcare sector faces the biggest political risks in recent years."

The Chief Market Strategist at Ameriprise indicated that he does not believe the recent consecutive declines in the Dow Jones Industrial Average necessarily signal future problems. The recent drop represents some profit-taking after significant gains in recent weeks. Expectations regarding the risks and opportunities brought by Trump's new government taking office next year have also been moderately adjusted, including whether the Trump 2.0 policy agenda can stimulate stock price increases.

Keith Lerner, Co-Chief Investment Officer and Chief Market Strategist at Truist Advisory Services, remarked that the way the Dow is falling is somewhat strange. Funds continue to flow into technology stocks. This is the dominant theme in this market—artificial intelligence and technology. After the election, investors are only focusing on the positive aspects of Trump's policies. Next year, they will have to pay attention to both the good and the bad, including concerns about Trump's threats to raise tariff rates and mass deportations.

Jeff Kilburg, CEO of KKM Financial, stated that since December, performance chasers in the Seven Sisters are making a final sprint for the end of 2024, while other S&P 500 constituents are being left behind, and the Dow is being particularly neglected