Remember when the Bee Gees’ Stayin’ Alive was the biggest hit on the radio? If so, you were around the last time the Dow Jones Industrial Average had a nine-day losing streak, which was reached Tuesday.
The only exchange-traded fund to track the oldest stock market benchmark, the SPDR Dow Jones Industrial Average ETF (DIA), fell another 2.6% Wednesday on inflation concerns, extending the longest stretch of consecutive losses for the index since 1978.
Several factors have contributed to the December downturn.
In the immediate rear view is a big post-election run-up. For the month ending Dec. 5, the beginning of the Dow’s nearly 47-year-old losing streak, DIA jumped nearly 7%. This strong short-term performance, representing nearly one-third of the entire year’s gain to date, may appear overdone to many investors that tend to lock in gains by selling shares ahead of an uncertain new year.
The Fed’s revised Summary of Economic Projections, or dot plot, now anticipates two rate cuts next year, down from the three projected in September, while inflation estimates were adjusted higher.
Looking ahead, in addition to the Fed’s slower rate policy projections, the incoming Trump administration’s policies, including potential tariffs and tax cuts, have compounded inflation concerns.
The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the performance of 30 large, publicly traded companies in the United States. These companies span various industries, excluding transportation and utilities, providing a snapshot of the overall health of the U.S. economy.
Unlike other indexes, the DJIA is price-weighted, meaning that companies with higher stock prices have a greater influence on the index’s movements. It is often used as a benchmark for market performance and investor sentiment.
The DIA ETF is designed to mirror the performance of the DJIA. By purchasing DIA shares, investors effectively own a portfolio that represents the 30 stocks in the DJIA. This allows investors to gain exposure to the overall performance of the DJIA without needing to purchase each individual stock.
DIA is structured to provide liquidity and ease of trading, making it a popular choice for both long-term investors and short-term traders. Additionally, the DIA ETF pays dividends, as it passes through the dividend income from the stocks it holds. This makes it an efficient way for investors to participate in the Dow’s performance while benefiting from its income potential.
