What is causing the Dow's historic slump and how worried you should be.

• Over the past eight sessions, more than half of the decline in the Dow Jones Industrial Average can be attributed to UnitedHealth, which has been the slowest-moving stock among the index's components.
• The rotation in the 30-stock Dow, which initially surged after Trump's reelection, has seen investors selling off cyclical names.
• The Dow's losing streak, while historic, is not a significant cause for worry.

Since February 1978, the Dow Jones Industrial Average has not experienced a losing streak of nine consecutive days. What is causing this decline and how concerned should investors be?

First off, let's explain which stocks are driving the losses.

The insurer that has been the biggest laggard in the 30-stock Dow during this losing streak is UnitedHealth, which has contributed to more than half of the decline in the price-weighted average over the past eight sessions. UnitedHealth has plunged 20% this month alone amid a broad sell-off in pharmacy benefit managers after President-elect Donald Trump's vow to "knock out" drug-industry middlemen. Additionally, UnitedHealth is going through a tumultuous period with the fatal shooting of Brian Thompson, the CEO of its insurance unit.

In December, the cyclical names in the Dow that initially surged on Trump's reelection are experiencing a rotation, with investors selling out. This is causing all stocks that typically perform well during economic growth to decline by at least 5%, significantly impacting the Dow's performance. These stocks were previously viewed as beneficiaries of Trump's deregulatory and pro-economy policies, which contributed to their strong November performance.

The Dow, primarily made up of blue-chip consumer discretionary and industrial companies, is commonly seen as a reflection of the overall economic climate. Despite a recent sell-off, investors remain hopeful about the economy for 2025 and do not anticipate a repeat of the stagflationary period of the late 1970s.

Most investors are shrugging it off

The Dow's recent losing streak, despite being historic, is not a cause for significant worry as it is a price-weighted metric that has been in use for over a century.

The Dow anomaly occurs while the broader market continues to perform well. The index hit a new high on December 6th and is only 0.9% away from that level. Additionally, the tech-heavy index reached a new record on Monday.

Although the length of Dow's sell-off is concerning, the magnitude is not as significant. As of Tuesday midday, the average has only decreased by 1,582 points, or 3.5% from the closing level on Dec. 4, when it first surpassed the 45,000 threshold. Technically, a correction of 10% or more is required, and we are far from achieving that.

The Dow, initially established in the 1890s to reflect a typical investor's portfolio through a straightforward average of the prices of all components, may no longer be an appropriate method today due to its limited diversification and emphasis on only 30 stocks.

"According to Mitchell Goldberg, President of ClientFirst Strategies, the DJIA no longer reflects its original purpose and is not a true representation of industrial America. Instead, its recent losing streak is indicative of how investors are currently overindulging in technology stocks."

The Dow's price-weighted nature limits its ability to accurately reflect the gains made by megacap stocks, despite the fact that both and are included in the index and have experienced at least a 9% increase this month.

The Federal Reserve's decision this week could trigger a rebound in the market, as many traders believe the retreat is only temporary and the oversold conditions provide an opportunity for a comeback.

""This pullback will serve as a refreshing pause before a reversal higher to close 2024, as predicted by Larry Tentarelli, chief technical strategist and founder of the Blue Chip Daily Trend Report. We anticipate buyers to enter the market this week, as indicated by the oversold readings in index internals," said Larry Tentarelli."

— CNBC's Michelle Fox, Fred Imbert and Alex Harring contributed reporting.