Dow Jones Slips as Buffett Indicator Flashes Warning Amid Tech Weakness

The Dow Jones Industrial Average retreated Wednesday as investors digested a stark valuation warning from Warren Buffett's namesake metric. The Buffett Indicator—measuring total U.S. stock market capitalization against GDP—hit 216.8%, far exceeding its historical average of 85%. Including private enterprises pushes the ratio to an alarming 328.7%.

Contrasting this caution, Bank of America anticipates seasonal tailwinds. Fourth-quarter tech stocks historically deliver 6.64% average returns with 80% win rates. The bank also highlights the 'Santa Rally' phenomenon—a consistent December-January window of market strength.

Treasury Secretary Scott Bessent reinforced dovish expectations, advocating for additional rate cuts following last week's 25-basis-point Fed reduction. This monetary policy divergence creates a complex backdrop for risk assets.