The Dow Jones Industrial Average (DJIA) has officially entered its longest losing streak since 2018, wrapping up eight consecutive days of decline last Friday. The blue-chip index slipped by nearly 111 points, or 0.25%, closing at 43,828.06, marking its seventh session of losses and the longest series of drop-offs since June of 2018. During this time, the Dow has dropped 2.7% but remains up around 16% year-to-date.
Meanwhile, the Nasdaq Composite recorded gains, climbing to new heights thanks to resilient tech stocks, which enjoyed significant increases, including Alphabet, Apple, and Tesla hitting all-time highs. The Nasdaq itself rose by about 1.2% on the same day, buoyed by heightened investor interest leading up to the Federal Reserve’s final interest rate decision of 2024.
Jay Hatfield, CEO of Infrastructure Capital Advisors, noted, “We’re kind of stuck in this trading range. The Nasdaq will outperform, small caps will underperform, [and the] Dow will underperform till we get some catalyst.” This sentiment reflects the cautious approach of investors awaiting the Federal Reserve’s announcements.
Shares of Nvidia have dropped significantly, entering correction territory after plunging over 4% for the month—showing a 10% drop from its record high previously seen. Despite this, the company has exhibited tremendous growth this year, experiencing gains of around 166% as it continues to ride the wave of the artificial intelligence boom, but recent performances have shown signs of volatility.
Interestingly, not all tech stocks are feeling the pressure. Broadcom, another tech giant, saw its stock surge by over 11% during the same week after reporting much stronger-than-expected fourth-quarter earnings, driven by skyrocketing AI revenue. “Broadcom’s annual growth of 220% from AI revenue, now at $12.2 billion, reflects high market demand,” noted analysts from Goldman Sachs. Following their call, Broadcom’s market capitalization exceeded $1 trillion, establishing itself as one of the powerhouse companies leading the charge.
Market futures remained subdued as investors absorbed the consequences of the Dow’s slump. Stock futures tied to the DJIA dropped by 66 points, or 0.1%, maintaining the trend of cautious trading activities. The S&P 500 futures mirrored this movement with slight declines, hinting at broader market anxiety.
The upcoming Federal Reserve meeting scheduled for this week looms large over investor sentiment. Currently, market watchers are pricing in a 95% chance for the Federal Reserve to announce a quarter-point rate cut, as per the CME Group's FedWatch tool. With the economy still grappling with inflation risks and fluctuated growth rates, speculation is rife about the pathways the Fed will choose.
Sam Stovall, chief investment strategist at CFRA, highlighted, “The market does like to climb a wall of worry.” He added historical perspectives, mentioning, “Following an up year for the S&P 500, top-performing sectors continue to outperform, implying resilience even amid fears.” Still, potential tariffs under the incoming Trump administration remain at the forefront, painting concerning prospects for international trade relations and their effects on market behavior.
While the Dow’s consistent losses offer cause for concern, broader stock market trends suggest underlying strength within certain sectors. The tech-driven Nasdaq Composite continues impressively and as analysts speculate future positive outcomes, particularly post-Fed meetings, investor focus remains split between caution and optimism.
With the end of 2024 approaching and the prospect of year-end rallies highlighting investor strategies, the coming week could illuminate the market mood. Many stakeholders remain attuned to the directional shifts, seeking potential rebounds or signals of sustained downturns.
For now, market participants are watching closely, ever cautious of the Dow’s significant losses juxtaposed against the resilience seen across tech stocks. The interplay of geopolitics, inflation, stock performance, and future Federal Reserve maneuvering will likely dictate much of Wall Street’s activity going forward.
