Dow, Nasdaq close worst week since late 2008

VIDEO: REUTERS
Traders work on the floor of the New York Stock Exchange in a file photo.
Traders work on the floor of the New York Stock Exchange in a file photo.PHOTO: REUTERS

NEW YORK (AFP) - Wall Street suffered a third straight rout on Friday (Dec 21), ending its worst week since late 2008 at the start of the global financial crisis in a sell-off prompted by worries over trade wars and a possible government shutdown.

The Dow Jones Industrial Average finished with a loss of 1.8 per cent or more than 400 points, at 22,445.37, taking losses for the week to nearly 7 per cent.

The broad-based S&P 500 slumped 2.1 per cent to 2,416.58, while the tech-rich Nasdaq Composite Index slid 3 per cent to close at 6,332.99.

The declines pushed the Nasdaq into a "bear" market, meaning a retreat of 20 per cent from its peak.

The losses came as Washington teetered towards a likely government shutdown as US President Donald Trump dug in on threats to close the government if congressional Democrats continue to refuse his demand for funds to build a wall on the border of Mexico.

Thousands of US government employees could be furloughed right before the end-of-year holidays without a paycheck if Trump and congressional Democrats fail to strike a deal by midnight (1pm Singapore time).

With that deadline looming, investors received another jolt in the final hour of trading when White House adviser Peter Navarro delivered hardline comments on the ongoing trade talks with China.

 
 

"China is basically trying to steal the future of Japan, the US and Europe, by going after our technology," Navarro, a longtime China hawk, told the Japan's Nikkei news agency in an interview conducted Thursday but published Friday.

And he said China must address all US concerns about its trade policies, saying there are "no half-measures."

Investors also have been anxious over the surprise resignation of Defense Secretary Jim Mattis, who laid out significant policy disagreements with the US president in his letter to Trump which he made public.

"We are in a fragile environment," said Gregori Volokhine of Meeschaert Financial Services.

"The extremist position is winning in the Trump administration, not just on trade but on everything."

Besides worries over the US-China trade war and a possible government shutdown, investors have been unnerved by the Federal Reserve's decision to raise interest rates this week, and projecting it would continue to raise next year.

New York Federal Reserve Bank President John Williams on Friday opened the door to a more benign monetary policy in 2019, saying the Fed was listening to the fears about the risks and will "be ready to reassess and re-evaluate our views and our policy stance."

Stocks briefly rallied on Williams remarks, but fell quickly back into the red.