Wall Street hits fresh year-lows on threat of US government shutdown, slowing growth2 min read . Updated: 22 Dec 2018, 12:50 AM IST
Dow Jones is down 0.74% at 22,690.53, S&P 500 is 1.00% lower at 2,442.85 and Nasdaq is weaker by 1.95% at 6,400.83
Bengaluru: Wall Street fell in volatile trading on Friday, after a few failed attempts at a rally, led by a drop in technology and other high-growth sectors, while defensive stocks rose amid concerns of slowing growth and a looming US government shutdown. The three major indexes swung between losses and gains of more than 1% as fragile investor nerves were tested by news of turmoil in Washington and soothing comments from an influential Federal Reserve official.
The S&P 500, already on pace for its worst December since the Great Depression, hit its lowest since August 2017. The Dow fell to its lowest since October 2017, while the Nasdaq sank to a 15-month low, toying with bear market territory for the second day in a row.
The defensive consumer staples, utilities and real estate sectors logged gains of 0.1% to 0.77%, while all the other eight S&P sectors declined.
“Investors are looking for cover. Within equities, investors are certainly gravitating towards the traditionally defensive segments of the market," said Mike Loewengart, vice president of investment strategy at E*TRADE Financial in New York.
The technology index sank 1.54%, while communication services, which houses high-growth names such as Facebook Inc. and Alphabet Inc., dropped 2.2%.
US President Donald Trump said there was a very good chance a government funding bill, which included funding for a wall along Mexico border, would not pass the Senate. Those worries were compounded by the sudden resignation of US defence secretary James Mattis.
“I think it’s a confluence of all the known issues that the investors have been digesting for the last few weeks. We have the prospect of a government shutdown today. We have more shake ups within the Trump administration," Loewengart said.
The markets got a lift earlier after New York Fed president John Williams said on CNBC the central bank is open to reassessing its views and listening to market signals that the economy could fall short of expectations.
Williams’ comments come after the Fed said on Wednesday it would largely stick to its plan to keep raising interest rates, spooking investors already grappling with mounting evidence of slowing growth and triggering the slide on Wall Street.
At 1.20pm ET, the Dow Jones Industrial Average was down 169.07 points, or 0.74%, at 22,690.53, the S&P 500 was down 24.57 points, or 1.00%, at 2,442.85 and the Nasdaq Composite was down 127.58 points, or 1.95%, at 6,400.83.
Adding to the mix was “quadruple-witching", when options on stocks and indexes as well as futures on indexes and stocks expire, tending to raise volumes.
Helping stanch the bleeding on Friday was Nike Inc., which jumped 6.2% after the firm’s quarterly results beat Wall Street estimates on strength in North America. The stock was the biggest driver of gains on the Dow and S&P.
The three main Wall Street indexes are already in correction territory, having fallen more than 10% from their record closing highs. They are closing in on bear market territory, which is marked when an index closes more than 20% below its closing high.
Declining issues outnumbered advancers for a 2.52-to-1 ratio on the NYSE and a 3.32-to-1 ratio on the Nasdaq. The S&P index recorded no new 52-week highs and 102 new lows, while the Nasdaq recorded four new highs and 659 new lows.
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