Dow Suffers Record-Breaking Christmas Eve Losses

Marcus Newton
December 27, 2018

Trump nevertheless vouched for Mnuchin publicly, shifting blame for the market volatility to the Federal Reserve instead. "So I think it's a tremendous opportunity to buy", Trump said, according to a report on Reuters website. "Very talented, very smart person".

The post-holiday rally comes after a shortened Christmas Eve trading session left the Nasdaq deep into correction territory, and the S&P within a wisp of a correction. Big-cap tech companies have also created panic in the market because their stocks have been among the biggest decliners, after reporting earnings that investors saw as disappointing. "This is a disaster for the Fed, a disaster for the president and a disaster for the economy".

Mnuchin meets regularly with Powell and it is not unheard of for a Fed chair to meet with the President, though it is rare because the position is meant to be independent of politics.

Nothing has been formally scheduled. The Wall Street Journal first reported the discussions about the meeting.

Far from calming the markets, the moves seemed to exacerbate Wall Street concerns.

An administration source dismissed the latest round of rumors that the secretary's continued tenure was on the line.

A recession is coming, they said.

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Bolstered by strong showings from the retail and energy sectors, the Dow Jones Industrial Average and S&P 500 each posted stellar post-Christmas rallies, even as the bitcoin price slumped several percentage points to headline a generally-sluggish day for the cryptocurrency market. The two men spoke on a variety of issues, including the government shutdown and an update on the status of trade talks. "It's going to take a long time to recover that confidence". Still, sources have previously told CNN that Trump was upset with Mnuchin over his advice to appoint Powell as Federal Reserve chairman. Trump nominated Powell past year to take over the Fed, but since interest rates began rising, Trump has upped his rhetoric against Powell. The slide started in earnest with the President's own tweets following his announcement of a trade deal with Beijing, in which he suggested he may yet impose radically higher tariffs if he's not happy with negotiations.

Investors have closely followed news that the president had privately discussed firing Powell.

There was a slight worry that Trump could fire Powell, though the legal waters were murky on that front-and it was more of a rumor mill story.

Over the weekend, Treasury Secretary Steven Mnuchin set off market anxiety after he sought to reassure investors about the partial shutdown with a statement saying that major banks have "ample liquidity". That triggered further panic on Monday, with the global benchmark S&P 500 index of USA stocks slumping 2.7 per cent in what has been dubbed the "Mnuchin massacre". That same day, Trump fired off a series of tweets, including one attacking the Federal Reserve.

Trump acknowledged the impasse has no foreseeable end date, telling reporters he couldn't say when the government would fully reopen.

Investors have been forced to trade choppily since later September, mainly due to uncertainty surrounding the trade war between the USA and China, along with the Fed's decision to increase raise interest rates.

Other reports by MaliBehiribAe

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