It was more a case of how low, how low, rather than Ho Ho Ho on Wall Street as the world’s biggest market suffering its worst Christmas Eve losses in history.
The slide – generated entirely by confused messaging from Donald Trump and his administration, saw the wider US market slide into the grip of the bear.
Investors reacted negatively to US Treasury Secretary Steven Mnuchin’s oddly timed attempt to calm investors about Wall Street banks liquidity – there being no question about how well they are funded before he issued his silly statement on Sunday.
Now there is and investors have started wondering about clearance – the way share, bond and other trades are handled on market with the big clearing houses part owned by baks and other financials.
Coming on top of the impasse over the funding of the US government via the Trump-induced shutdown, and the worries about the longevity of the Fed chairman, Jay Powell, Mnuchin’s comments and discussion with major market regulators on Monday (who told him nothing out of the ordinary was happening in the markets) sent exactly the wrong message and investors sold off in heavy pre-Christmas trading.
The half-day of trading on Wall Street saw the Dow slump 2.9% to 21,792, the Nasdaq (already in bear market territory) lost another 2.2% to 6,193 and the key S&P 500 lost 2.7% to 2,351, down just over 20% from its intraday high in September.
The US Bespoke Investment Group pointed out that the largest fall in the S&P 500 on Christmas Eve in US market history was 0.91% up to Monday – and that was in 1933! The biggest fall in the Dow on Christmas Eve was 1.1% in 1918, according to a story on Marketwatch.com.
With a week to go in 2018, the market is looking at its worst December and year for around a decade.
Secretary Mnuchin’s attempt to buoy market sentiment was also undermined by another attack on the Fed by President Trump.
President Trump cancelled his plans to spend Christmas at his Florida resort of Mar-a-Lago and is staying in Washington while Congress has gone home for the Christmas break.
US analysts say Trump will spend Christmas tweeting because he was in the White House with little else to do – on Monday alone there were 10 tweets.
“I am all alone (poor me) in the White House waiting for the Democrats to come back and make a deal on desperately needed Border Security,” Mr Trump tweeted in one of the 10.
“At some point the Democrats not wanting to make a deal will cost our Country more money than the Border Wall we are all talking about. Crazy!”
The tweets fell on deaf ears, except his criticism of the Fed which added to the slide in share prices.
“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!” Mr Trump tweeted.
Mr Trump himself is not a good golfer.
