The blue chip Dow Jones Industrial Average is on the brink of its lengthiest stretch of declines since 1974, a rut marked Wednesday by a broader selloff tied to a hawkish update from the Federal Reserve regarding further interest rate cuts.
A trader works on the New York Stock Exchange floor on Wednesday.
The Dow tumbled 470 points, or 1.1%, by 3 p.m. EDT, reversing what was a 150-point gain prior to the Fed’s 2 p.m. announcement it agreed to lower interest rates by 25 basis points as expected but it forecasts just two more 25 basis-point cuts in 2025, a decrease from the four projected last quarter.
If the losses hold, it will be the Dow’s 11th-straight trading session in the red, the longest losing streak since 1974.
The selloff extended across financial markets as investors reacted sourly to the prospect of more restrictive monetary policy, which weighs on corporate profit margins as borrowing costs grow pricier.
The S&P 500 and tech-heavy Nasdaq stock indexes declined 1.3% and 1.5%, respectively, while yields for 10-year U.S. government bonds rose 10 basis points to nearly 4.5%, on track for the highest end-of-day level since July.
Higher yields indicate declining value in bonds and signify investor expectations of higher Fed rates for longer.
The Dow’s top-performing stocks Wednesday were Nvidia and UnitedHealth Group, the two worst-performing stocks during the first 10 days of the losing streak.
2,070 points. That’s how much the Dow is down during its down stretch dating back to Dec. 5.
“Markets should be happy that the Fed is taking a measured approach to normalizing interest rates,” Jamie Cox, managing partner at Harris Financial Group, wrote in emailed comments, noting the need for inflation to “cooperate lower” for the Fed to get more aggressive.