Why the Dow is in such a historic funk and how concerned you should be

Published On Dec 17, 2024, 11:54 AM

The Dow Jones Industrial Average has been experiencing a significant decline, marked by a nine-day losing streak, the longest since 1978. This drop is largely attributed to a substantial 20% decline in UnitedHealth's stock due to concerns over drug pricing after Trump’s election, along with weakness in other cyclical stocks like Sherwin-Williams, Caterpillar, and Goldman Sachs. Despite this, the broader market remains strong, with indices like the S&P 500 and Nasdaq achieving record highs. Some analysts believe that this sell-off in the Dow is not indicative of broader economic troubles and anticipate a rebound especially following upcoming Federal Reserve decisions.

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Stock Forecasts

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Negative

The decline is driven mainly by specific issues with key stocks in the Dow, particularly UnitedHealth. The broader market conditions appear healthier, as evidenced by record highs in the S&P 500 and Nasdaq. A rebound could occur following favorable economic indicators from the Federal Reserve, suggesting that the recent downturn may be temporary.

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Positive

The overall cycle within the Dow indicates selling pressures on stocks linked to old economy sectors. However, as economic optimism for 2025 remains strong, investments in broader market indices are advisable, offering potential upside as the Dow corrects itself.

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