Here’s Why the Dow Just Had Its Worst Slump in 50 Years

The Dow Jones Industrial Average tumbled Wednesday after falling in every of the earlier 9 classes, 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 firms, diverged currently? 

UnitedHealth Slide After CEO Killing Weighs on Dow

UnitedHealth Group (UNH) shares misplaced greater than 20% of their worth within the 9 classes after Dec. 4, the day the CEO of its insurance coverage arm was fatally shot in an assault that’s put renewed concentrate on the enterprise of healthcare in America. That was additionally the final day the Dow closed larger.

Since the capturing, lawmakers have launched laws to pressure the breakup of sure huge healthcare firms 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 Health (CVS) and Cigna (CI), each of which, like UnitedHealth, function insurance coverage firms and PBMs, fell 24% and 20%, respectively, between Dec. 4 and Tuesday’s shut. 

Before its droop, UnitedHealth had a inventory value of $610, making it the priciest inventory within the Dow, and thus the index’s most influential element. That’s as a result of the Dow is price-weighted, which means the upper an organization’s share value, the larger its influence on the index. The S&P 500 and Nasdaq, in the meantime, are capitalization-weighted and provides extra affect to firms with better market values. 

Nvidia’s Addition to Dow Also Pulls Index Lower

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% larger in mid-day buying and selling. UnitedHealth Group was the one element of the 30-stock Dow to shut within the inexperienced, rising 2.9% alongside friends CVS and Cigna.

Update—December 18, 2024: This article was up to date to mirror inventory costs and index ranges as of the market shut on Wednesday.