Unease on Wall Street deepened on Monday, with stocks primed to slide to lows that would be officially deemed a bear market.
The tech-heavy Nasdaq index has already entered a bear market, having fallen 22% since its August high. The S&P 500 was down 2.5% – a 19% plunge since its recent high – just ahead of an early 1pm market close, bringing the benchmark less than 1% from the gloomy designation.
The Dow Jones Industrial Average fell more than 2.6%, with not a single stock gaining on the index.
Heavy selling followed a failed attempt by Treasury Secretary Steven Mnuchin to calm markets by assuring bank CEOs that there was “ample liquidity.”
The call – something that usually would come only during a deep crisis – came despite the fact that there was no widespread concern about the issue of liquidity in the markets, leading to questions as to whether he knew something others didn’t.
That debacle was followed by a convening of US President Donald Trump’s Working Group on Financial Markets, often referred to as the “plunge protection team.” Top US regulators – including Federal Reserve policymakers and the Securities and Exchange Commission – on the call told Mnuchin that nothing is out of the ordinary with markets, Bloomberg reported.
While stocks had been pairing losses, Trump himself sent them back into a tailspin with a tweet slamming the Fed, and prompting increased speculation that he was prepared to fire Fed chairman Jerome Powell.
“The only problem our economy has is the Fed,” the president wrote, suggesting the Fed’s role is to prop up the markets to support his policy agenda.
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!
— Donald J. Trump (@realDonaldTrump) December 24, 2018