Stock Market News for December 18, 2024

the Dow Jones Industrial Average The index sank deeper into the history books on Wednesday, as the index recorded its 10th consecutive losing day as an index Disappointing interest rate forecasts by the Federal Reserve It shook the stock market.

The Dow lost 1,123.03 points, or 2.58%, to 42,326.87, its worst losing streak since an 11-day decline in 1974. Wednesday’s decline was the worst since August, and only the second time it has lost 1,000 points this year in One session. the Standard & Poor’s 500 It lost 2.95% to 5872.16 Nasdaq Composite It fell 3.56% to 19,392.69 as losses intensified by the close of trading.

The central bank cut the overnight borrowing rate by a quarter of a percentage point to a target range of 4.25% to 4.5%, as expected. However, the Fed indicated on Wednesday afternoon that it will cut interest rates only twice in 2025, fewer than the four cuts included in its latest forecast. Federal Reserve Chairman Jerome Powell said the central bank’s move to cut interest rates in recent months allows him to “exercise more caution as we consider further interest rate adjustments.”

Before Wednesday, traders had hoped the Fed would remain aggressive with interest rate cuts in 2025, further fueling the bull market. Treasury yields jumped after the Federal Reserve’s dovish outlook, putting pressure on stock prices. The yield on 10-year Treasury bonds exceeded 4.50%.

“Risk assets and the high-value stock market don’t like the idea that interest rate cuts are less likely on both sides of the mandate,” Jeffrey Gundlach, CEO of DoubleLine Capital, said on CNBC’s “Closing Bell.” “My takeaway from that press conference is that there will not be a strong cutting cycle…and the market is very much in sync with that.”

The Dow Jones’ losing streak began the session after it closed above 45,000 points for the first time ever on December 4. The total losses of the Dow Jones during its losing streak amounted to 6%.

“Goodbye cup. No Christmas cheer from the Fed. Policymakers expect higher inflation and lower unemployment in 2024. There is simply no reason for monetary easing given these expectations,” said David Russell, global head of market strategy at TradeStation. “The easy lifting has occurred now that interest rates are no longer so clearly constrained. It is a logical time to pause.”

Before it intensified on Wednesday, the Dow’s worst failure in decades was mostly caused by a rotation from old-economy stocks to technology stocks, a sector the index has been measuring for a century against broader market metrics.

But the entire market was shaken on Wednesday. The S&P 500’s loss was also the worst since August and trimmed its 2024 gain to 23%.