Stocks plunge again after Trump blasts Federal Reserve

1 year 9 months 1 day 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
WASHINGTON (AP) — Supreme Court Justice Ruth Bader Ginsburg becomes the first woman in American history to lie in state... More >>
41 minutes ago Friday, September 25 2020 Sep 25, 2020 Friday, September 25, 2020 4:44:00 AM CDT September 25, 2020 in News
COLUMBIA - The Mizzou Tigers will play the football season opener against Alabama, Saturday. Mizzou announced it is sold... More >>
1 hour ago Friday, September 25 2020 Sep 25, 2020 Friday, September 25, 2020 4:11:00 AM CDT September 25, 2020 in News
TERRE HAUTE, Ind. (AP) — The U.S. government has put the first Black inmate to death since the Trump administration... More >>
8 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 9:02:53 PM CDT September 24, 2020 in News
COLUMBIA - Some CPS parents and special needs advocates said CPS hasn't fully complied with Individualized Education Program (IEP) guidelines.... More >>
8 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 8:39:00 PM CDT September 24, 2020 in News
COLUMBIA – The circuit court system has had to make some major adjustments in the last few months to meet... More >>
8 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 8:38:00 PM CDT September 24, 2020 in News
JEFFERSON CITY - Governor Parson said he and his wife Teresa are fine after their positive COVID-19 test results Wednesday.... More >>
10 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 7:00:00 PM CDT September 24, 2020 in News
COLUMBIA - Missouri Senator Josh Hawley, R, discussed the open Supreme Court seat and the possible next stimulus package with... More >>
10 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 6:51:00 PM CDT September 24, 2020 in News
JEFFERSON CITY - Missouri Governor Mike Parson signed Executive Order 20-17, activating the Missouri National Guard Thursday afternoon. The... More >>
10 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 6:33:00 PM CDT September 24, 2020 in News
COLUMBIA - At Thursday's UM System Board of Curators meeting, UM President and MU Chancellor Mun Choi said the university's... More >>
11 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 5:57:00 PM CDT September 24, 2020 in News
COLUMBIA - The Columbia Police Department is taking a different approach to solving the 2019 investigation involving the remains of... More >>
11 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 5:52:00 PM CDT September 24, 2020 in News
JEFFERSON CITY - Missouri Department of Health and Senior Services revised its guidelines for long-term care facilities that choose to... More >>
12 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 5:19:00 PM CDT September 24, 2020 in News
COLUMBIA - Columbia and Boone County Public Health and Senior Services officials said they have seen a decrease in demand... More >>
12 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 4:59:00 PM CDT September 24, 2020 in News
ALTON, Mo. (AP) — A judge has ordered Missouri to sell part of nearly 4,200 acres of land it bought... More >>
13 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 3:28:00 PM CDT September 24, 2020 in News
COLUMBIA- Columbia police were dispatched to Passions Adult Boutique Thursday around 12:05 a.m. after a suspect demanded money while displaying... More >>
14 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 3:14:00 PM CDT September 24, 2020 in News
JEFFERSON CITY- Two additional individuals have been arrested for their role in the May 2017 homicide. During the 2017... More >>
15 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 1:47:00 PM CDT September 24, 2020 in News
COLUMBIA- The UM Board of Curators voted to name the new center for Race, Citizenship and Justice after former interim... More >>
16 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 1:21:00 PM CDT September 24, 2020 in News
(AP)- Hospitals in Missouri’s third-largest city are approaching capacity due to a continuing surge of coronavirus cases. The Springfield... More >>
16 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 12:43:00 PM CDT September 24, 2020 in News
(AP)- Kansas City Royals outfielder Alex Gordon says he will retire after the season. The player who spent his... More >>
17 hours ago Thursday, September 24 2020 Sep 24, 2020 Thursday, September 24, 2020 12:14:00 PM CDT September 24, 2020 in News
Columbia, MO
Broken Clouds 56°
6am 58°
7am 58°
8am 60°
9am 63°