Traders work the floor of the New York Stock Exchange on July 25, 2023, in New York City. Wall Street stocks were mixed early July 25 following a round of generally positive earnings as markets looked ahead to a Federal Reserve interest rate decision.
New York CNN  — 

The Dow slipped on Thursday, snapping a 13-day winning streak.

The blue-chip index fell 237 points after being on track to close higher for a 14th consecutive session. That would have marked the Dow’s longest run of consecutive gains since May 1897.

If the Dow had closed higher Thursday and Friday, it would have notched 15 days of gains, its longest daily winning streak ever.

But the index’s run was at historic levels before it was cut short Thursday: On Wednesday it notched its 13th straight day of gains, its best winning streak since 1987 and its highest level since February 2022.

The Dow, up roughly 6% 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.

The interior of the New York Stock Exchange's old building in 1895.

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 recent rally boded 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 0.6% 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.