Why the Dow is suddenly in a historic funk

The Dow Jones Industrial Average (^DJI) is on its worst losing streak in nearly 50 years.

The major index has fallen for nine straight trading days, its largest stretch of consecutive declines since 1978. The move lower in the Dow comes as large-cap tech has largely been holding up the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) throughout December.

The Dow’s losses amount to roughly 3%, or more than 1,500 points, in the past nine trading sessions. The index has fallen from a record close of 45,014 on Dec. 4 to 43,499 as of Tuesday’s close. In that same time frame, the S&P 500 is down about 0.6%, while the Nasdaq Composite is up almost 2%.

Given the Dow’s construction, it’s not benefitting from the tech rally. Of the Dow’s 30 stocks, just four — Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA) — are members of the “Magnificent Seven” tech stocks. This means the Dow, unlike the S&P 500 and Nasdaq, hasn’t benefitted from massive rallies in Tesla (TSLA), which is up more than 37% in the past 10 days, or Alphabet (GOOGL,GOOG), which has risen 14% in the same time period.

Instead, the Dow has been pulled down, partly due to the recent sell-off in Nvidia stock. The blue-chip index added Nvidia on Nov. 8. Since then, one of the hottest stocks in the market has cooled off, with shares down nearly 12%.

UnitedHealth Group has been the worst performer in the Dow Jones Industrial Average over the past ten days with shares down nearly 20%. — UnitedHealth Group has been the worst performer in the Dow Jones Industrial Average over the past 10 days, with shares down nearly 20%. · Source: Yahoo Finance

“It’s really the tech leadership versus everything else, value versus growth,” WisdomTree global chief investment officer Jeremy Schwartz told Yahoo Finance.

A sell-off in healthcare stocks has also weighed on the Dow. UnitedHealth (UNH) is down about 20% in the past 10 days following the murder of its CEO Brian Thompson on Dec. 4. Other healthcare stocks have also lagged, with Johnson & Johnson (JNJ) and Amgen (AMGN) both down more than 4% in the past 10 trading sessions.

Schwartz said the Dow’s decline hasn’t been surprising given the run-up in stocks this year, though.

“We are still optimistic for next year. We think stocks versus bonds is still [the place] to be in the markets,” he said. “But there was so much strong positioning for this rally and for this seasonal rally that it’s not actually a surprise to see this pullback.”