The Dow Jones Industrial Average inched higher in intraday trading Wednesday after falling yesterday for a ninth consecutive session, capping off its longest stretch of daily losses since 1978.
The blue chip index slumped 3.5% during its latest losing streak, while the S&P 500 gave up just 0.6% and the Nasdaq Composite rose nearly 2%.
So why have these three major indexes, each containing the stocks of some of America’s largest companies, diverged lately?
UnitedHealth Group (UNH) shares lost more than 20% of their value in the nine sessions after Dec. 4, the day the CEO of its insurance arm was fatally shot in an attack that’s put renewed focus on the business of healthcare in America. That was also the last day the Dow closed higher.
Since the shooting, lawmakers have introduced legislation to force the breakup of certain big healthcare companies and President-elect Donald Trump has vowed to “take out the middleman,” referring to pharmacy benefit managers (PBMs), who negotiate drug prices on behalf of insurers, employers, and government health plans.
Shares of CVS Health (CVS) and Cigna (CI), both of which, like UnitedHealth, operate insurance companies and PBMs, fell 24% and 20%, respectively, between Dec. 4 and Tuesday’s close.
Before its slump, UnitedHealth had a stock price of $610, making it the priciest stock in the Dow, and thus the index’s most influential component. That’s because the Dow is price-weighted, meaning the higher a company’s share price, the bigger its impact on the index. The S&P 500 and Nasdaq, meanwhile, are capitalization-weighted and give more influence to companies with greater market values.
UnitedHealth hasn’t been the only laggard in the Dow this month. Nvidia (NVDA), which joined the blue-chip index in early November, has fallen in all but one trading session since Dec. 4. The stock, possibly weighed on by reports of an anti-monopoly investigation in China and the ascent of competitor Broadcom (AVGO), entered a technical correction earlier this week.
The Dow appeared to be on track to snap its losing streak on Wednesday. The index was up 0.4% around midday, with Nvidia and UnitedHealth leading the move higher, both rising more than 3%.
If the Dow were to fall Thursday, it would mark its longest losing streak since September 1974, when the index declined 11 days in a row.
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