The Dow is sinking, jeopardizing what could be its longest run since 1897

By Krystal Hur, CNN

New York (CNN) — The Dow slipped on Thursday, putting the blue-chip index on pace to snap a 13-day winning streak.

The Dow fell 200 points, or 0.6%. That comes after the Dow on Thursday morning looked on track to close higher for a 14th consecutive session, which would have marked its longest run of consecutive gains since May 1897.

If the Dow manages to make a comeback and close higher today, and for a 15th straight day on Friday, it would notch its longest daily winning streak ever.

The blue-chip index’s run is already at historic levels: The Dow on Wednesday notched its 13th straight day of gains, its best winning streak since 1987 and its highest level since February 2022.

The Dow, up roughly 7% for the year, has rallied in recent weeks as cooler-than-expected inflation data has investors more optimistic that a soft landing, or no recession, could be in the cards for the economy.

That, in turn, has spurred investors to snap up shares of cyclical stocks, or shares of companies that are sensitive to the economy.

Strong earnings and investor optimism about tech — particularly fueled by interest in AI — has also helped stocks pick up steam throughout the year. The Nasdaq initially surged Thursday, boosted by a stronger-than-expected quarterly financial report from Meta Platforms, before sliding.

The Dow’s rally bodes well for Wall Street, since it suggests that the market’s gains are continuing to broaden beyond just the seven Big Tech stocks that have dominated this year.

A rally in the blue-chip index also tends to foreshadow gains across the market.

The broader S&P 500 fell 0.4% Thursday.

The market isn’t out of the woods yet

The Federal Reserve on Wednesday raised interest rates to their highest level in 22 years — as markets expected — but officials said they haven’t ruled out a rate hike later this year.

“We believe the market may underestimate the Fed’s resolve to keep rates higher for longer. This is a Fed that cares more about inflation than recession,” said Rhys Williams, chief strategist at Spouting Rock Asset Management.

Traders are currently pricing in six rate cuts for 2024, though they remain divided on the magnitude of those cuts, according to the CME FedWatch Tool. Some investors say that the central bank is unlikely to pivot as soon as Wall Street expects, or as quickly.

“We believe the market is a little ahead of itself expecting significant cuts to the policy rate in 2024 given the overall stickiness of inflation and signs that certain parts of the economy are reaccelerating, housing being one of them,” said Mike Sanders, portfolio manager and head of fixed income at Madison Investments.

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