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Key Takeaways
- The Dow Jones Industrial Common notched its longest day by day shedding streak in 50 years when it fell for a tenth straight session on Wednesday.
- Wednesday’s drop got here after the Federal Reserve scaled again its forecast for rate of interest cuts amid uncertainty concerning the path of inflation within the coming yr.
- The declines of the earlier 9 days got here after the killing of a UnitedHealth Group government put a highlight on the enterprise of well being care, weighing on shares within the sector and, subsequently, the price-weighted Dow.
- Nvidia, one of many Dow’s latest members, has additionally trailed the market and dragged down the index in latest weeks.
The Dow Jones Industrial Common tumbled Wednesday after falling in every of the earlier 9 periods, capping off its longest stretch of day by day losses since 1974.
The blue-chip index has slumped 6% throughout its newest shedding streak. The S&P 500 and the Nasdaq Composite have shed a relatively modest 3.5% and 1.8%, respectively, regardless of struggling extra painful routs on Wednesday.
So why have these three main indexes, every containing the shares of a few of America’s largest corporations, diverged currently?
UnitedHealth Slide After CEO Killing Weighs on Dow
UnitedHealth Group (UNH) shares misplaced greater than 20% of their worth within the 9 periods after Dec. 4, the day the CEO of its insurance coverage arm was fatally shot in an assault that’s put renewed give attention to the enterprise of healthcare in America. That was additionally the final day the Dow closed greater.
Because the capturing, lawmakers have launched laws to drive the breakup of sure massive healthcare corporations and President-elect Donald Trump has vowed to “take out the intermediary,” referring to pharmacy profit managers (PBMs), who negotiate drug costs on behalf of insurers, employers, and authorities well being plans.
Shares of CVS Well being (CVS) and Cigna (CI), each of which, like UnitedHealth, function insurance coverage corporations and PBMs, fell 24% and 20%, respectively, between Dec. 4 and Tuesday’s shut.
Earlier than its droop, UnitedHealth had a inventory worth of $610, making it the priciest inventory within the Dow, and thus the index’s most influential part. That’s as a result of the Dow is price-weighted, which means the upper an organization’s share worth, the larger its affect on the index. The S&P 500 and Nasdaq, in the meantime, are capitalization-weighted and provides extra affect to corporations with better market values.
Nvidia’s Addition to Dow Additionally Pulls Index Decrease
UnitedHealth hasn’t been the one laggard within the Dow this month. Nvidia (NVDA), which joined the blue-chip index in early November, has fallen in all however one buying and selling session since Dec. 4. The inventory, probably weighed on by stories of an anti-monopoly investigation in China and the ascent of competitor Broadcom (AVGO), entered a technical correction earlier this week.
The Dow was on monitor to snap its shedding streak on Wednesday earlier than the Federal Reserve’s rate of interest projections sparked a broad sell-off. Nvidia shares fell 1.1% on Wednesday after buying and selling greater than 3% greater in mid-day buying and selling. UnitedHealth Group was the one part of the 30-stock Dow to shut within the inexperienced, rising 2.9% alongside friends CVS and Cigna.
Replace—December 18, 2024: This text was up to date to mirror inventory costs and index ranges as of the market shut on Wednesday.