United States stocks suffer worst week in seven years

Marcus Newton
December 23, 2018

Without a decent rally, this could be the worst December since 1931.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 20, 2018.

A series of sharp declines over the past week have left stocks headed for their worst monthly loss in almost a decade.

The S&P 500 is down 256.99 points, or 9.6 per cent.

Investors are responding to a weakening outlook for the USA economy by selling stocks and buying ultra-safe US government bonds.

In Nasdaq's record-long bull market, which ended with its all-time-high close on August 29, the index gained more than 539 percent from its post-financial-crisis low on March 9, 2009.

The market swoon is coming even as the US economy is on track to expand this year at the fastest pace in 13 years. Markets tend to move, however, on what investors anticipate will happen further out.

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The Street reported fears of a government shutdown was also being felt on the markets.

Among other threats: the trade dispute between the USA and China, and rising US interest rates, which act as a brake on economic growth by making it more expensive for businesses and individuals to borrow money.

Treasury Secretary Steven Mnuchin told Fox Business on Thursday afternoon that the market's reaction to the Fed was "completely overblown".

The three major indexes swung between losses and gains of more than 1 percent as fragile investor nerves were tested by news of turmoil in Washington and soothing comments from an influential Federal Reserve official. And the Federal Reserve added to those concerns this week by signaling that its rate-increase plan will continue into 2019 despite downgrading its economic growth forecast. The index broke 23,000 in its downward slide for the first time in over a year on Thursday and shows no sign of bouncing back anytime soon, having lost a total of 1,655 points in its worst week since October 2008.

The technology index sank 1.54 percent, while communication services, which houses high-growth names such as Facebook Inc and Alphabet Inc, dropped 2.2 percent. The Nasdaq Composite Index fell into a bear market and the S&P 500 was on the brink of one itself, down almost 18 percent from its record earlier this year. The bond-buying has the effect of sending long-term bond yields lower, which reduces interest rates on mortgages and other kinds of long-term loans.

Furthermore, another drop in oil prices drove down energy stocks. That sent the price of gold higher, and it gained 0.9 percent to $1,267.9 an ounce. The yield on the 10-year Treasury finished today nearly a half percent lower than its recent October peak.

The stock markets in France, Germany, Britain, Italy, Portugal, Spain, Tokyo and Hong Kong also fell.

Other reports by MaliBehiribAe

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