Dow Jones Slumps to Longest Losing Streak Since 1978 Despite Strong Year-to-Date Gains

The U.S.’ Dow Jones Industrial Average has entered its longest losing streak since 1978, raising concerns among investors amid an otherwise positive year for stocks. Tuesday’s drop was largely attributed to UnitedHealth Group’s poor performance, though the index continues to show robust long-term gains.

The Dow Jones fell 270 points, or 0.6%, on Tuesday, marking the ninth straight trading day in the red—a stretch that began on December 5. According to FactSet, this is the first time since February 1978 that the Dow has experienced such a prolonged decline. Back in 1978, the index was trading at about 750 points, less than 2% of today’s level, which exceeds 43,000.

During this nine-day losing streak, the Dow has dropped 3.5%, translating to a loss of 1,560 points. UnitedHealth Group, a major healthcare insurance stock, was Tuesday’s worst performer among the Dow’s 30 constituents, falling $13 or 2.6% to hit its lowest level in six months. Other notable companies experiencing losses included banking giant Goldman Sachs and artificial intelligence leader Nvidia, both of which fell by at least 1%.

The spotlight on UnitedHealth’s struggles is not new. As the Dow’s worst performer during this losing streak, UnitedHealth’s stock has plummeted 21% over nine days. This decline is nearly double that of the next-worst performer, Nvidia, which dropped 11%. Other companies such as Goldman Sachs, Home Depot, Sherwin-Williams, and Chevron have also seen declines of at least 4% during this period.

UnitedHealth’s challenges are tied to multiple factors, including concerns over how policies from President-elect Donald Trump and his nominee for Health and Human Services secretary, Robert F. Kennedy Jr., may impact the healthcare industry. Additionally, the stock has faced backlash following the fatal shooting of Brian Thompson, the chief executive of UnitedHealth’s insurance subsidiary. CNBC reports that UnitedHealth’s stock accounted for about 40% of the Dow’s decline in December through Monday.

Since its inception in 1928, the Dow has served as a key barometer of the performance of 30 leading American companies from various industries. However, it differs from other indexes, such as the S&P 500 and Nasdaq, as it calculates its performance based on a stock’s share price rather than the company’s market capitalization. This methodology gives outsized influence to higher-priced stocks. For example, Goldman Sachs and UnitedHealth, despite ranking as the 47th- and 17th-largest American companies by market cap, respectively, are the two most heavily weighted stocks in the Dow. This can lead to discrepancies between the Dow and market cap-weighted indexes like the S&P 500.

Despite the current losing streak, the Dow remains up more than 18% year-to-date, factoring in reinvested dividends, and is trading within 4% of its all-time high reached just before this downturn began. Since Election Day, the index has gained nearly 3%. Furthermore, while December has brought a 2.7% loss for the Dow, such monthly declines are not uncommon. Over the past three years, the index has experienced 11 months with larger losses.

In conclusion, the Dow’s ongoing slide, fueled in part by UnitedHealth’s sharp decline, highlights vulnerabilities in the healthcare sector and broader market sentiment. Nevertheless, the index’s solid performance over the year underscores its resilience amid short-term fluctuations. As investors digest these developments, many will keep an eye on broader trends and potential policy shifts that could impact key sectors in the future.