Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931 when stocks crashed during the Great Depression. Both are already down nearly 8% making the possibility that we will live through another Great Depression very real.
The Dow and S&P 500 are already down 7.8 percent and 7.6 percent this month, respectively, according to a report by CNBC. December is typically a very positive month for the markets. The Dow has only fallen during 25 Decembers going back to 1931. The Dow Jones Industrial Average lost 507 points, closing more than two percent lower on Monday while the S&P 500 lurched to a 14-month low, also showing more than a two percent loss for the day.
The selloff continued on the Asian markets as well, with Japan’s Nikkei slumping by 1.8 percent on Tuesday. China’s Shanghai Composite closed almost one percent lower, according to RT. These numbers do not look great for the “booming” and “expanding” economy we are allegedly experiencing.
S&P 500 plunges to lowest since Oct2017 w/no sign of Santa Rally. Focus has shifted dramatically away from exogenous issues (trade, politics) towards something more germane to stocks & risk sentiment: growth, JPM says. Trade backdrop better than few mths, but it may be too late. pic.twitter.com/G0wKbz3IRU
— Holger Zschaepitz (@Schuldensuehner) December 17, 2018
Analysts explain the market’s bad performance by investor fears over the cooling economy and lack of signs on the US-China trade dispute settlement. Fears of the expected interest rate hike by the US Federal Reserve became one of the major forces driving the market’s volatile behavior in the last few months. U.S. president Donald Trump put pressure on the Fed on Monday, arguing it would be madness to raise interest rates. –RT
“With increased stock market volatility and signs of slower growth overseas, there are increasing calls for the Fed to halt its rate increases,” wrote David Kelly, chief global strategist at JPMorgan Funds. “This is where the Fed needs to keep its head first because current Fed policy is neither too aggressive nor too tight and second because a change of course at this point could undermine confidence.”