Dow Jones logs longest losing run since 2018 even as Nasdaq soars to new record

The S&P 500 and Nasdaq closed with gains while the Dow Jones ended lower.

In a mixed session on Wall Street, the Dow Jones Industrial Average extended its fall to the eighth session overnight, logging its longest losing run since 2018. At the same time, a rally in tech names propelled the Nasdaq Composite to notch a fresh record high.

The tech-heavy index rose 1.24 percent, while the S&P 500 gained 0.38 percent. In stark contrast, the Dow Jones Industrial Average lagged, dropping 0.25 percent. It was also the first time ever that the Nasdaq ended at an all-time high while the Dow fell for an eighth straight day, according to Dow Jones Market Data.

What’s even more intriguing is that the Nasdaq's surge occurred without the support of AI chipmaker Nvidia, which has driven much of the index's gains this year. Instead, all the other 'Magnificent Seven' stocks powered the Nasdaq's rally, with significant contributions from Broadcom.

In its eight-day losing streak, the Dow has slipped nearly 3 percent but is still up 16 percent year-to-date. However, the tech-heavy Nasdaq Composite has notched superior gains of 34 percent over the same period, more than double the Dow's upmove.

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Highlighting the divergence in the performances of the Dow Jones and Nasdaq, Ritesh Jain, founder of Pinetree Macro, noted that a momentum trade near the year-end was taking place, with many fund managers needing to chase the winners if they wanted to outperform the benchmarks. "Hence, they are selling non-tech names to buy mega-cap tech stocks, and this trade is taking a life of its own. With the overnight dip in value stocks and jump in growth stocks, the ratio between them just fell to the lowest in 24 years," Jain added.

Aside from the diverging trend between the Nasdaq and Dow Jones, Wall Street is focused on the Federal Reserve's upcoming rate decision, due on December 18. Market participants are widely anticipating a 25-basis point rate cut to be announced. According to the CME FedWatch Tool, 95.4 percent of investors are betting on the chances of the US Federal Reserve delivering a quarter-sized rate cut, as of December 17.

Regardless, greater significance is given to the Fed's revised forecasts on inflation, growth, and rate cuts in 2025, which will be released along with the policy outcome. Investors are eagerly waiting to gauge clues on the further course of policy action that the US central bank may take in 2025.

Also Read | Why there might be fewer Fed rate cuts in 2025?

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