Dow Jones index to end 13-day winning streak

Dow Jones index to end 13-day winning streak

The Dow Jones Industrial Average Shows Signs of a Broader Rally

July 27 (Reuters) – The iconic Dow Jones Industrial Average (.DJI) is on the verge of ending its longest winning streak in 36 years, bringing Wall Street’s tech-driven rally into focus. While the Dow closed higher for an impressive 13 straight sessions through Wednesday, surpassing a record streak set in 1987, it dipped 0.5% on Thursday afternoon. This setback doesn’t overshadow the fact that the tech-driven rally is broadening, encompassing a wider range of stocks.

The S&P 500 (.SPX), which includes over 500 stocks and is a preferred stock market benchmark for many investment professionals, often gains more attention. However, the Dow’s daily movements are widely quoted in news media, making it highly recognized among Americans. The recent rally of the Dow reflects traders’ beliefs that the U.S. Federal Reserve’s recent rate hike was its last action to control inflation and maintain a stable economy. This optimism about the U.S. economy’s resilience also fuels investors’ positive outlook, indicating a promising future.

It’s worth noting that the Dow has lagged behind Wall Street’s other main indexes in 2023, with a modest 7% year-to-date gain compared to the S&P 500’s 18% surge and the Nasdaq’s (.IXIC) remarkable 35% increase. However, the Dow is now catching up, potentially bringing more stability to the overall market. Art Hogan, chief market strategist at B Riley Wealth, suggests that this catch-up trade is steering the Dow towards a healthier position.

One key distinguisher between the Dow and the other indexes lies in its composition. The Dow’s 30 constituents do not include major market players like Tesla (TSLA.O), Meta Platforms (META.O), Nvidia (NVDA.O), or Amazon (AMZN.O). These four stocks have experienced significant gains in the ongoing stock market rally, fueled by the prospects of artificial intelligence advancements and an eventual end to the Fed’s rate hikes. Hogan further emphasizes that the market is diversifying, no longer revolving solely around seven “artificial intelligence anointed darlings.”

While Salesforce (CRM.N), Apple (AAPL.O), and Microsoft (MSFT.O) have performed exceptionally well this year, with gains ranging from 40% to 70%, the Dow has been held back by declines in Amgen (AMGN.O), Chevron (CVX.N), Verizon Communications (VZ.N), and Walgreen Boots Alliance (WBA.O). These setbacks have resulted in nearly half of the Dow constituents remaining in negative territory for 2023, despite their better performance in July.

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Although the Dow’s winning streak is notably long, its overall strength is not exceptional. Since July 7, the index has climbed 4.8%, while the Nasdaq has experienced a 3.1% increase, and the S&P 500 has risen by 3.4%. The Dow’s previous 13-day winning streak in January 1987 resulted in a more substantial gain of 11.1%.

In conclusion, while the Dow’s current winning streak may come to an end soon, it signifies a broader rally on Wall Street. The inclusion of a wider range of stocks and the optimism surrounding the U.S. economy contribute to this trend. Although the Dow has historically lagged behind other indexes, it is now playing catch-up, which may bring more stability to the market. As the Dow continues to evolve, investors will need to keep a close eye on both the tech-driven stocks and traditional heavyweights to gauge the market’s overall performance.

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