US stocks dive after brutal holiday-shortened session

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, US, on Dec 24, 2018.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, US, on Dec 24, 2018. PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks plunged for a fourth straight session Monday (Dec 24) amid rising doubts over the US economy after Treasury Secretary Steven Mnuchin's efforts to reassure investors fell flat.

The Dow Jones Industrial Average slumped more than 650 points, or 2.9 percent, to 21,792.20.

The broad-based S&P 500 fell 2.7 percent to 2,351.10, while the tech-rich Nasdaq Composite Index slid 2.2 percent to 6,192.92.

The declines brought the S&P 500 to the brink of a "bear market," considered a drop of 20 percent from its peak.

CNBC reported the losses were the worst ever for Wall Street on Christmas Eve, a holiday-shortened session ahead of Tuesday, when markets will be closed.

The drops also extended the December equity market battering, which last week led to the biggest weekly losses for the Dow and Nasdaq since the 2008 financial crisis.

The declines came as Mnuchin was widely panned by market watchers over a phone call with the six biggest US banks, reporting on Twitter that the six CEOs have "ample liquidity" available.

 

"It just raises more alarm bells for people 'that maybe there is something bigger going on' if it's necessary to have phone calls with the six biggest bank CEOs," said Manulife AM senior portfolio manager Nate Thooft.

Markets were also unnerved by weekend news reports that US President Donald Trump was weighing whether to fire Federal Reserve Chairman Jerome Powell, accounts that Mnuchin said Trump had denied.

"If Trump tries to remove Powell, it could throw the financial markets into deep chaos that makes the current market turmoil look tame," said a note from Oxford Economics.

Trump himself took another swipe at the Fed on Twitter, although he did not mention Powell by name.

"The only problem our economy has is the Fed. They don't have a feel for the Market, they don't understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can't score because he has no touch - he can't putt!" Trump tweeted.