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According to experts, the Dow Jones Industrial Average fell more than 650 points, the worst trading session of the day Christmas of the country's history, after a statement by the Treasury Secretary that caused an escalation of trade with China and in a context of economic slowdown.
Inventories are negative for the year and the Dow Jones lost thousands of points on a peak of nearly 27,000.
The Dow closed the day with a dramatic drop of 653 points to 21,792 in an abbreviated trading session before the Christmas holidays, down almost 10% from last week. The day's losses of 2.9%, added to 6.8% last week, paved the way for a week of sober negotiations last week.
"I believe it was the worst month of the year in the history of December 24," said the head of US Global Investors. Trader Michael Matousek told ABC News. "Christmas Eve has not been worse since I started in the industry 22 years ago."
Last week was the worst year of the index for 10 years – since the 2008 financial crisis. December is about to end as the worst month of December since the Great Depression.
The NASDAQ, a high-tech center, also suffered, ending the day at over 5% (6,193). It entered bearish territory last week for the first time since the recession of 2008, which means a drop of more than 20% from its record of August 29th.
PHOTO: A photo of President Donald Trump is posted on a computer on the floor of the New York Stock Exchange in New York, December 24, 2018. (Seth Wenig / AP)
(PLUS: Secretary of the Treasury: Trump denies suggesting dismissal of Fed presidency)
President Trump reiterated his attack on the Federal Reserve, which is become predictable after poor performance of the title. market, on which the President tends to focus in relation to other economic indicators.
The economy is the Fed. Trump tweeted. "The Fed is like a powerful golfer who can not score because he has no contact – he can not putter!"
The only problem in our economy is the Fed. They do not have a clue about the market, they do not understand trade wars, strong dollars or even democratic closures across borders. The Fed is like a powerful golfer who can not score because he has no contact
– Donald J. Trump (@realDonaldTrump) December 24, 2018
The central bank has raised its interest rates interest last week in a widely anticipated move of 0.25%. A bank has issued less optimistic forecasts than expected, suggesting a slowdown in the economy.
Trump is still opposed to rising interest rates and criticized his president, Jerome "Jay" Powell. According to the Wasington Post and other media outlets Mnuchin for proposing Powell to this post.
Markets advanced lower tweet on fears that Trump would try to overthrow Powell, adding to market instability and concerns about the threat to the central bank's independence.
However, the recent downturn in the markets has been largely attributed to the evolution of White House policy, triggering a lingering trade war with China, citing a government shutdown and chaotic information testifying to the Political instability.
PHOTO: Traders work on the New York Stock Exchange Floor in New York, December 21, 2018. (Bryan R Smith / Reuters , FILE)
Over the weekend, Mnuchin tweeted that he had called the CEOs of JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo and Citigroup after his Holiday in Cabo San L UCAS, Mexico. His agency is one of the federal departments affected by the current government closure. Others at the Treasury are obliged to say at home without pay. It is unclear whether Mnoutchine went on a government plane for his vacation.
The bank's executives assured the secretary that "they had enough cash to loan for consumption, commercial markets and all other operations of the bank. market".
"They have not encountered any compensation or margin problems and the markets continue to function properly," he added.
Mnuchin's comments seem to have been designed to appease investors, economists and traders. run on the banks, which precipitated the last crisis.
However, the message may have had the opposite effect since it did not bother market watchers before it tweeted.
"If it was not the end of Jared Bernstein, former chief economist of Vice President Joe Biden, told The Washington Post that" the markets are already nervous enough. "It's as if we were sending a message the space shields can intercept the incoming asteroids.Uh, I did not know that there was one waiting for us. "
Market observers generally optimistic about the economy have expressed their concern at the panic that Mnuchin's words, associated with general instability in the White House, could ignite. "19659032]" I think the Mnuchin was being pressed by Trump to "do something" and that this attempt half-cooked to calm markets is the result, "Timothy Duy, professor of economics at the University of Oregon and author of the influential Fed Watch blog, wrote to ABC News in an email.
"Mnuchin apparently thought ( it is a speculation of course) that easing the fears of a financial crisis could help the stock market. But this is not a serious fear at this stage, "said Duy., Adding that traders are frightened by trade wars, political uncertainty and an economy that is slowing down as many experts predicted. [19659033"Mnuchinhasraisedafearthatisnotreallyatopicalissueandindoingsocreatesaproblemthatnotknowaboutothers"Duyadded"Thatkindofthingcanprecipitateafinancialcrisisbecausefearingtheunknownmarketplayersstopbuyinganythingandfinancialinstitutionsstoplendingloans"
PHOTO: The Treasury Secretary, Steven Mnuchin, addresses the media after a TV interview at the White House in Washington, DC December 3, 2018. (Leah Millis / Reuters, FILE)
Many experts have noted that the panic caused by the Treasury Secretary's comments might cause a rush to the banks, which largely contributed to the Great Depression. It is generally accepted that banks are doing well.
(MORE: White House: Trump would accept less money for the border post)
"Banks are afraid of losing money So they start withdrawing money, like Lehman Brothers, and so must go to the Fed to get more cash, which is basically a bailout, "said Matousek.
"There is a difference between now and never because we did not have stress tests like we do now," Matousek added. "We have so many tests of resistance, they are so regulated, when I saw that he was calling the banks, it tells me that the administration is a bit unsure of what is going on."
Duy added that even though Mnuchin's words were very unusual, "it is widely accepted that Mnuchin's actions were so poorly designed that they could not be taken seriously, but they were so poorly designed. that they implied a worrying lack of competence in shaping economic policies as a whole, which creates uncertainty that undermines investor confidence. "
The NYSE has closed early Monday at 13:00. AND. It is closed on Tuesday at Christmas.
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