But stocks opened lower on Friday on PCE inflation, shutdown fears.
The Dow Jones Industrial Average just ended its worst stretch of daily declines in 46 years, posting a modest 25-point gain on Thursday.
The 25-point increase on Thursday to 42,342 halts a nine-day losing streak that saw the blue-chip index go from 45,014 after the closing bell on December 4 to 42,327 at the close on December 18 – a 6% decline.
Thursday was only the second positive day for the Dow since the start of December. The last time it fell for nine straight days was in late February of 1978, when the Dow dropped to a mere 749 points.
The S&P 500 and Nasdaq are also both down over that same stretch, but not to the extent of the Dow. The S&P 500 has fallen roughly 3.5% since December 5, while the Nasdaq is off around 1.7%.
The blue-chip Dow Jones index looked to be in for another negative day on Friday as it opened 85 points lower. As of the market close on Thursday, the Dow Jones was up 12% YTD.
UnitedHealth effect
December is typically one of the strongest months of the year for stocks, but this year has been a bit different. Inflation is ticking back up, there are concerns about the impact of tariffs and a potential government shutdown. And last week, the FOMC said it expects fewer rate cuts in 2025 and 2026.
But the event that began the Dow’s plunge was the death of UnitedHealth Group (NYSE:UNH) CEO Brian Thompson, who was shot and killed on December 4 in Manhattan.
Since then, UnitedHealth stock has plummeted about 20%, from a closing price of $611 per share on December 4 to $489 per share on December 19. But unlike the Dow Jones, UnitedHealth stock managed a few positive days in that stretch of time.
UnitedHealth’s decline has had an outsized effect on the Dow for a few reasons. First, there are only 30 stocks, so a major move one way or the other by a stock has a bigger impact than it would on the S&P 500 or Nasdaq. Second, the Dow is price-weighted, not cap-weighted, so stocks with higher share prices have more weight in the index.
UnitedHealth had been the priciest stock in the Dow at $611 per share when the decline started, and now its second behind Goldman Sachs (NYSE:GS).
PCE inflation rises, markets open lower
The markets opened lower on Friday, as the threat of a government shutdown looms. The House voted Thursday to reject a plan to fund federal agencies and operations and extend the debt ceiling. If a funding proposal is not approved by the end of Saturday, the government will be shut down.
The Dow Jones was off about 85 points at the opening bell on Friday, while the Nasdaq was down roughly 200 points, and the S&P fell about 30 points.
The other catalyst for the market dropping on Friday was the November Personal Consumption Expenditures (PCE) report. This preferred gauge of inflation for the Fed rose to 2.4% in November, up from 2.3% in October.
This is the second straight month that PCE inflation has gone up, after hitting a recent low of 2.1% in September. Core PCE in November, excluding food and energy, remained at 2.8%.
Both the PCE and core PCE, while up, were better than economists had expected. The median forecast for the PCE in November was 2.5% while the core PCE forecast was 2.9%.
