Stocks plunge again after Trump blasts Federal Reserve

1 year 7 months 1 week ago Monday, December 24 2018 Dec 24, 2018 Monday, December 24, 2018 2:23:30 PM CST December 24, 2018 in News
By: The Associated Press

NEW YORK (AP) — Stocks have plunged again, with the Dow Jones Industrial Average falling 653 points on a holiday-shortened trading day following President Trump's tweet attacking the Federal Reserve and its independence.

The Dow Jones lost 2.9 percent and the benchmark S&P500 lost 2.7 percent after the president's tweet expressing frustration over the Fed's decision to raise its key short-term rate.

The Nasdaq fell 2.2 percent. Trading volume was low as the market closed early ahead of the Christmas holiday shutdown.

The Christmas Eve sell-off extends the market's losses after its worst week in more than seven years. The major indexes are down 16 to 26 percent from their autumn highs.

Technology stocks, health care companies and banks took some of the heaviest losses in the sell-off, which began following news that Treasury Secretary Steven Mnuchin called CEOs of six major banks Sunday in an apparent attempt to stabilize jittery markets. He specifically tried to assure the public and financial markets that Jerome Powell's job as Fed chairman was safe.

President Donald Trump said Monday the only problem facing the U.S. economy is the Federal Reserve, which has raised its key short-term rate four times this year given the low unemployment rate and brisk pace of economic growth.

The president tweeted that Fed officials "don't have a feel for the Market, they don't understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders."

Trump has argued that the Fed is hindering the economy through its rate increases, which are intended to prevent inflation from rising too high.

Trump's latest tweet attacking the Fed was met with concern that any effort to diminish Powell or remove him as chairman could destabilize the economy.

"He is seeking open warfare on Christmas Eve," said Peter Conti-Brown, a financial historian at the Wharton School of the University of Pennsylvania. "We've never seen anything like this full-blown and full-frontal assault. This is a disaster for the Fed, a disaster for the president and a disaster for the economy."

At a news conference last week, Powell said rate hikes were evidence of the economy's strength. But Trump sees the increases — which lead to higher borrowing costs for consumers and businesses — as an economic and political threat.

The president's attacks are widely seen as an intrusion on the political independence of the Fed, which exists to determine the flow of money based off economic data on employment and inflation.

Fed independence has long been among the bedrocks of the U.S. financial markets. It ensures that central bankers can make politically unpopular decisions, such as fighting high inflation in the 1980s or rescuing banks after the 2008 financial crisis.

Sen. Richard Shelby of Alabama, a senior Republican on the Banking Committee, has cautioned against removing Powell.

"I'd be very careful doing that," Shelby told reporters Saturday at the Capitol. "The Federal Reserve is set up to be independent."

Stocks did decline after Powell announced this year's fourth rate hike on Wednesday. But the sell-off appeared to reflect concerns that the Fed might be moving too fast in its plans to raise rates and to shrink its vast portfolio of bonds given an economic slowdown that is expected in 2019.

Fed officials voted unanimously to increase rates last week. Among those voting with Powell were three other board members who were chosen by Trump: Richard Clarida, Randal Quarles and Michelle Bowman.

The president expressed his displeasure Monday with the Fed after Treasury Secretary Steve Mnuchin had tweeted on Saturday that Powell's job was safe. Mnuchin also tweeted on Sunday that he had checked with the heads of the six largest U.S. banks to ensure that they had enough liquidity to operate in a stock market that has tumbled sharply since October.

"My sense is the Mnuchin tweets don't tell us much about the economy, but they provide unusual insight into the chaos inside the White House," said Joseph Brusuelas, chief economist at the consultancy RSM. "Rather than instilling confidence, it created confusion and raised more questions than it answered. Foremost among those is, how safe is the job of Jay Powell as chairman of the Federal Reserve?"

More News

Grid
List
COLUMBIA - Following Tuesday's school board meeting, Columbia Public Schools' Superintendent Peter Stiepleman talked with KOMU 8's Emily Spain about... More >>
9 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 8:25:00 PM CDT August 05, 2020 in News
COLUMBIA — It's been almost one month since Columbia residents were told their recycling would no longer be picked up... More >>
11 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 6:36:00 PM CDT August 05, 2020 in News
JEFFERSON CITY — The Senate Committee on Transportation, Infrastructure, and Public Safety voted to approve a bill (SB1) to address... More >>
12 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 5:35:00 PM CDT August 05, 2020 in News
MISSOURI — As COVID-19 continues to spread throughout Missouri, state and local officials confirm new case counts daily. This... More >>
12 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 5:30:00 PM CDT August 05, 2020 in News
COLUMBIA— The Missouri State High School Activities Association has given fully online schools the opportunity to compete within in-person activities.... More >>
12 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 4:58:00 PM CDT August 05, 2020 in News
13 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 4:41:17 PM CDT August 05, 2020 in News
JEFFERSON CITY — Less than 24 hours after securing the Republican nomination for governor, Mike Parson gave a media briefing... More >>
13 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 4:39:00 PM CDT August 05, 2020 in News
COLUMBIA —The University of Missouri has announced a new temporary program that does not require standardized testing for all first-time... More >>
14 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 3:03:00 PM CDT August 05, 2020 in News
COLUMBIA — Amendment 2, which greatly expands Medicaid eligibility in Missouri, passed Tuesday night. But the next steps are more... More >>
15 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 2:13:00 PM CDT August 05, 2020 in News
COLUMBIA — Truman's Bar and Grill was issued a formal citation from Columbia's municipal court for violating the recent social... More >>
16 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 12:57:30 PM CDT August 05, 2020 in News
As COVID-19 continues to spread, KOMU 8 will continue to update you about impacts in the community. You can... More >>
18 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 11:30:00 AM CDT August 05, 2020 in News
FULTON — Leaders from across Callaway County met in Fulton on Wednesday to present a unified message regarding COVID-19. ... More >>
18 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 10:59:00 AM CDT August 05, 2020 in News
(CNN) -- Vitamin D is known as the "sunshine vitamin" because your body absorbs the nutrient primarily through exposure to... More >>
19 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 10:40:06 AM CDT August 05, 2020 in A Brighter Tomorrow
( Missourian ) - The Columbia School Board is considering delaying the district’s start date to after Labor Day... More >>
19 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 10:28:11 AM CDT August 05, 2020 in News
JEFFERSON CITY - The registration process for students is changing while students also change their classes for the fall semester.... More >>
19 hours ago Wednesday, August 05 2020 Aug 5, 2020 Wednesday, August 05, 2020 10:00:00 AM CDT August 05, 2020 in News
JEFFERSON CITY — Current Missouri Governor Mike Parson will be on the ballot in November after securing the Republican nomination... More >>
1 day ago Tuesday, August 04 2020 Aug 4, 2020 Tuesday, August 04, 2020 10:45:00 PM CDT August 04, 2020 in News
COLUMBIA— Missourians voted to expand Medicaid eligibility, according to reporting from the Associated Press. The State Auditor’s Office estimated... More >>
1 day ago Tuesday, August 04 2020 Aug 4, 2020 Tuesday, August 04, 2020 10:22:00 PM CDT August 04, 2020 in News
PETTIS COUNTY — The Pettis County prosecutor has called for an independent special prosecutor to investigate the death of Hannah... More >>
1 day ago Tuesday, August 04 2020 Aug 4, 2020 Tuesday, August 04, 2020 10:06:00 PM CDT August 04, 2020 in News
Columbia, MO
Broken Clouds 62°
6am 63°
7am 63°
8am 66°
9am 70°