Dow plunges after Steven Mnuchin fails to calm markets

Dow plunges after Steven Mnuchin fails to calm markets

Dow plunges after Steven Mnuchin fails to calm markets

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

The broader S&P 500 was down nearly one per cent at 2,398 while the technology-focused Nasdaq was also about one per cent lower at 6,247.

US regulators assured Treasury Secretary Steven Mnuchin that nothing is out of the ordinary in the financial markets, Bloomberg reported on Monday citing a source familiar with the matter. However, trading volumes are expected to be muted, with markets closing at 1 p.m. ET (1800 GMT) ahead of the Christmas holiday, and could exaggerate movements.

According to a statement from the department, Mr. Mnuchin received assurances from the CEOs in separate calls that "they have ample liquidity available for lending to consumer, business markets, and all other market operations".

USA stock markets have had their worst month in a decade as investors worry about growth prospects in the midst of an escalating global trade war. "It's really fear of the unknown that has given investors grief".

The drop in markets picked up last week after the Federal Reserve raised rates for the fourth time this year and said it would largely continue with its rate hike path and slim down its vast holdings of bonds, draining the easy money that has helped power the stock market's decade-long bull run.

"Mnuchin is most likely anxious about his job, but everyone else will draw the conclusion that there is perhaps much more to worry about".

Dow plunges after Steven Mnuchin fails to calm markets
Dow plunges after Steven Mnuchin fails to calm markets

PHOTO: Traders work on the floor of the New York Stock Exchange in New York, Dec. 21, 2018.

Overall, for the month, the stock market has lost about 7.8% of its value during the month of December, meaning that this month could be the worst December for the stock market since the Great Depression.

"Mnuchin attempted some damage control", Win Thin, global head of currency strategy at Brown Brothers Harriman, said in a note, adding that the move could backfire.

However, the message may have had the opposite effect since it was not a concern of market watchers until his tweet. "And with markets on edge, the last thing they needed was another issue to worry about", Thin said. After briefly topping $75 a barrel in October, the USA oil benchmark West Texas Intermediate has slumped steadily lower on growth concerns. The S&P recorded no new 52-week highs and 230 new lows.

The selloff wasn't limited to North America.

In Europe trading, London's FTSE was down 0.5 percent, France's CAC traded down 1.5 percent. Germany's DAX was closed.

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