Thread: Dow plunges 650 points in worst Christmas Eve trading session ever

Dow plunges 650 points in worst Christmas Eve trading session ever

By Mike ObelPublished December 24, 2018

Will a government shutdown hurt the stock market?

Fox News contributor Liz Peek and FNC contributor James Freeman discuss how a partial government shutdown will affect the stock market and the Federal Reserve’s recent rate hike.

U.S. stocks on Monday posted their worst Christmas Eve session ever, as a perfect storm of concerns drove investors to bail out of a market that was already badly bruised.

The blue-chip Dow Jones Industrial Average had its steepest drop on Christmas Eve in its 122-year history. It also was the worst Christmas Eve for the tech-heavy Nasdaq Composite and the first time the broader S&P 500 ever had more than a 1 percent drop on Dec. 24. The loss for the S&P 500 put the index into bear market, where it joined the Nasdaq.

If the markets had not closed at 1 p.m. ET for the holiday, the damage might have been worse.

A trifecta of concerns drove investors to sell: The prospect of rising interest rates; global economic weakness; and the likelihood that the partial government shutdown will extend into next year.

Millions of kids living in poverty go to bed hungry each night. But you can change that. Just $100 buys 40 warm meals for those in your community.

Congress missed a midnight Friday deadline for getting a spending bill passed, resulting in a partial government shutdown. No votes are scheduled to end the stalemate until after Christmas.

Monday's hammering followed a stomach-churning week, when the Dow lost 6.9 percent and the S&P 500 tumbled 7.1 percent. The Nasdaq gave up 8.4 percent, making it the first of the three major averages to fall into bear market territory.

Concerns about the ability of the markets to handle the sell-off promoted Treasury Secretary Steven Mnuchin late Sunday to contact the CEOs of the nation’s six largest banks and convene a meeting of the President’s Working Group on Financial Markets. That group, which includes officials in the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission, met to ensure the financial system had adequate liquidity to handle all the selling.

Mnuchin "confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly," the Treasury Department said in a statement.

Ticker Security Last Change %Chg
IJI DOW JONES AVERAGES 21792.2 -653.17 -2.91%
SP500 S&P 500 2351.1 -65.52 -2.71%
I:COMP NASDAQ COMPOSITE INDEX 6192.9195 -140.08 -2.21%

The day's downdraft hammered crude oil prices: West Texas Intermediate, the benchmark U.S. crude oil, tumbled 6.7 percent to $42.53 per barrel.

The only shred of good news Monday came when China said it plans to remove import and export tariffs in 2019 on a range of goods, including import taxes on alternative meals used in animal feed, to secure supplies of raw materials amid trade tensions with the United States and boosting outbound cargoes.

In Monday’s Asian trading, China’s Shanghai Composite ended the day up 0.4 percent.

Hong Kong’s Hang Seng index dropped 0.4 percent.

And Japan's markets were closed.

In Europe trading, London’s FTSE was down 0.5 percent, France’s CAC traded down 1.5 percent. Germany’s markets were closed for Christmas Eve.

On Friday, stocks ended a choppy session sharply lower with the Nasdaq Composite in bear market territory.

The tech-heavy index lost 3 percent, or more than 195 points, the Dow Jones Industrials fell over 414 points, or nearly 2 percent, while the S&P shed 2 percent plus, ending the week with a third down session.

Amid the selling, investors did get decent economic data on Friday. Third-quarter gross domestic product came in at 3.4 percent in a third update released on Friday, in line with analyst expectations and slightly lower than the first reading of 3.5 percent, according to the Commerce Department.

FOX Business' Ken Martin contributed to this story.

https://www.foxbusiness.com/markets/...g-session-ever

GDP growth terrific! Trump winning Trade War with China!! Trump scheduling Summit with North Korea!! Trump building 115 miles of wall without DemoQuack Wall Funding!! Great news on liquidity, banks are safe and solid!!

The only bad news that matters now is the Shutdown. DemoQuacks need to return to DC and pass the funding bills so Trump can sign them all. He's at his desk .... waiting.

Originally Posted by Judy

GDP growth terrific! Trump winning Trade War with China!! Trump scheduling Summit with North Korea!! Trump building 115 miles of wall without DemoQuack Wall Funding!! Great news on liquidity, banks are safe and solid!!

The only bad news that matters now is the Shutdown. DemoQuacks need to return to DC and pass the funding bills so Trump can sign them all. He's at his desk .... waiting.

You must really think Trump is blowing it if you think he needs your constant cheer-leading to prop him up. Why else would you be so anxious to defend him at every turn. You're the only person I know that could take the above news article as a positive and attempt to spin it into something great.

Just like the last couple meetings with North Korea, this one will probably just turn into another dry hole.

Trump is not going to build any wall that isn't funded and authorized by the U.S. Congress. He hasn't up to this point and he won't in the future. That's an unfortunate truth.

There is no indication that I can find that we're winning the trade war with China. The trade war could go on for several years or more according to a couple sources I read.

I'd been waiting to see what the GDP figure was for third quarter. That was the first article I saw that reported it. Everyone who had been asked about it the last few days thought 2.5 to 3.0 %, but it blew in off the top at 3.5%. That's fantastic news about our economy.

None of our meetings with North Korea have been "dry holes". They've all produced something good.

Trump's going to build the wall without any more funding from Congress, because he isn't going to get any more wall funding from Congress, at least not much.

We're definitely winning the trade war with China. They're passing a law to end intellectual property theft, a law that forbids forcing US companies to share their intellectual property with China in order to do business in China. I posted that news today. China also announced today that China is lifting many import taxes on many products. China announced yesterday or the day before, China at Trump's request for them to stop illegal fentanyl trafficking into the US is making it illegal and they're even making it a capital crime with a possible death sentence. China through their President Xi Jinping agreed in the last meeting with Trump at the G20 Summit in Argentina on December 1, to the 142 demands Trump presented to end the trade war, make it official and put it in writing by March 1, 2019.

Oh and did you hear Trump is pulling all of our troops out of Syria? Mattis signed the orders on Syria yesterday.

Donald Trump Owns This Stock Market

It wasn’t smart to dump a dovish Fed chief, run up the deficit, and start a trade war. Trump did all three.

By Barry Ritholtz
December 10, 2018, 11:55 AM EST





The bragging suddenly stopped. Photograph: Asahi Shimbun/Getty ImagesBarry Ritholtz is a Bloomberg Opinion columnist.

For those looking for an explanation of why the stock market suddenly became tumultuous in the fourth quarter of 2018, you can stop searching: The answer is President Donald Trump.

I don’t say this lightly.

For the better part of the past three years, I have suggested that investors not let their partisan political views influence their choices. This is no longer the case. The Trump administration’s policies, passed as legislation by Congress and implemented by the executive branch, have driven interest rates higher, made deficits bigger and led to a trade war, and are risking a global slowdown and even a recession.

For a while, markets were able to ignore this and absorb the flow of good news about the economy, which finally was shedding the drag from the financial crisis. At the same time, I also said presidents generally get too much credit or blame for the economy, although they can, of course, screw up. Indeed, a president, whether misguided by his advisers or ill-informed (this president has both going for him), can make things much worse. As I wrote earlier this year:

The word inconsequential is an overstatement, as presidents can and do mess up. Richard Nixon’s opening of formal relations with China had far-reaching consequences; the deregulation of markets under Jimmy Carter, Ronald Reagan, Bill Clinton and George H.W. Bush was surely important for the economy in ways both good and bad; so too was President George W. Bush’s invasion of Iraq. But these were all broad policies that took years or even decades to be felt and understood.

I assumed that Trump’s aggressive style, economic ignorance and personal peccadilloes wouldn’t leave a lasting mark on either stocks or bonds. Now, roughly two years later, the chaos surrounding this presidency proves that was wishful thinking.

At the risk of engaging in narrative fallacy (with a dash of hindsight bias), let’s consider three distinct policies of this administration, and how they are hurting the economy and markets:

• Higher interest rates: Trump replaced Janet Yellen, a dovish Federal Reserve chief (whose policies he liked), with hawkish Jerome Powell, whose policies he dislikes. Rates have gone higher, and it is the proximate result of the president’s appointment.

There is no one else to blame for this mistake but the president. Powell’s leanings were well known; so too were those of Trump’s appointment for vice chairman, Richard Clarida.

This self-inflicted error is perplexing: When Trump was running for office, he berated Yellen, saying she “should be ashamed that rates were so low.” We have since found out that he did not re-appoint Yellen because he felt that, at 5-foot, 3-inches, she was “too short” to run the central bank. This has to be one of the great unforced mistakes in the postwar history of U.S. monetary policy.

• Global recession concerns: Rising rates have helped push the yield curve toward inversion, with short-term rates higher than long-term rates. At least the five-year and the two-year Treasuries have inverted; the classic recession warning is when yields on 10-year and the two-year securities invert.

Now, we see broader signs that global growth is slowing. Corporate profits may have hit a peak. 1 Economies are cyclical, and the U.S. has gone almost a decade without a recession, roughly two times longer than the average interval between slowdowns. That implies we are overdue for a slump. None of the usual signs of an imminent recession are present, but 2020-21 isn’t an unthinkable time line.

• Tariffs and trade war: Yet another self-inflicted wound seems to have taken place in the aftermath of the G-20 summit in Argentina. Trump announced a ceasefire in the trade dispute with China. Equity futures rallied strongly a week ago on Sunday night.

The truce turned out to be nonexistent. Bloomberg News showed a side-by-side comparison of statements by Trump and by the Chinese government on the supposed deal, which was never reduced to writing. It isn’t just that Trump overstated the terms of the agreement; there was no deal. 2 Wall Street subsequently had its worst week since March, and it looks like we may be in for more of the same this week.

The president sandbagged Wall Street. Despite his well-known casual relationship with the truth, traders naively assumed the president wouldn’t mislead about something as crucial as the resolution of an expanding trade war. By the time the president declared “I am a Tariff Man,” he had lost the trust of traders.

To be sure, these are not the only factors behind the stock-market sell-off. Rising deficits have spooked bond markets; enthusiasm about the large corporate tax cuts passed in December 2017 has faded; the strong dollar is often cited as a headwind for corporate earnings; U.S. stock valuations remain rich; China’s economy has slowed; Brexit is problematic, and the rest of Europe has more than a few messy problems. Any combination of these could be contributing to market volatility.

That said, we are nearing the halfway mark of Trump’s presidency. Those waiting for that pivot toward his being presidential have been disappointed. Instead, they are now extrapolating his policy errors forward, and finding a significant and negative affect on the U.S. economy and stock markets.

I’m not in the business of making forecasts, so I will pose a question: Does anyone think it gets better from here?

• To be fair, wags have been calling a peak in corporate profits for a long while.
• CNBC’s Carl Quintanilla quotes a JPMorgan trading note: "It doesn’t seem like anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump’s tweets (which seem if not completely fabricated then grossly exaggerated) with reality."
  
  https://www.bloomberg.com/opinion/ar...s-stock-market

Hey, that's a handsome picture of Trump! Good one Bloomberg.

Yeah, it's Trump's Economy and that means it's Trump's Stock Market, too. As soon as he can figure out how to get important information to the Fed and deal effectively with the DemoQuacks Press, it will be the most beautiful economy in world history.

In the meantime, investors need to read Trump's Tweets every day, multiple times a day, then you'll know what's really happening in real time. If you don't do that, you're always going to be way behind the curve and cost your clients a lot of money for no valid reason at all.

"It wasn’t smart to dump a dovish Fed chief, run up the deficit, and start a trade war. Trump did all three."

Originally Posted by MW

"It wasn’t smart to dump a dovish Fed chief, run up the deficit, and start a trade war. Trump did all three."

According to all the economic data, it was smart.

3.5% GDP in 3rd quarter. Little to no inflation. Some wage growth, more coming soon. Lowest gas prices in a decade. Largest Christmas sales in many years. Many companies including on line sales breaking records. Tariff revenue pouring in. Tax cuts already paid for themselves with more revenue already collected after the tax cuts than before them.

So, why does a "Republican" post DemoQuack Propaganda against a Republican President who is helping US fix our country?

Judy wrote (excerpt):

So, why does a "Republican" post DemoQuack Propaganda against a Republican President who is helping US fix our country?

Huh??? I don't see anything in the article that identifies the article author as a Democrat. Regardless of what you may believe, not everyone that doesn't agree with Trump's every move is a Democrat.

You don't recognize DemoQuack Propaganda. SAD!!