There was very little to smile about on Wall Street Monday. By the time the Closing Bell rang, stocks had suffered their worst Christmas Eve performance ever. December’s already been a been a terrible month, and the stock market is on track for its worst December since the Great Depression.
Monday’s sell-off accelerated after a tweet from President Donald Trump about the Federal Reserve, which just raised interest rates last week. The President tweeted, “The only problem our economy has is the Fed. They don’t have a feel for the Market.”
The president has been repeatedly critical of the Fed chief, raising fears that he might seek to remove him. At a news conference last week, the Federal Reserve chairman was asked if he was under pressure from the president.
“Political considerations have played no role whatsoever in our discussion or decisions about monetary policy. We’re always going to be focused on the mission that Congress has given us. We have the tools to carry it about. We have the independence, which we think is essential, to be able to do our jobs in a nonpolitical way,” Federal Reserve Chairman Jerome Powell at news conference on Dec. 19.
“It’s really important to note that the Federal Reserve is not responsible for the market going up. It does not see the market going up as being its responsibility. It is responsible for two things, and two things only: price stability and unemployment,” said The Atlantic’s economic policy reporter Annie Lowrey.
Lowrey explained to PBS NewsHour another reason behind Monday’s meltdown — which was a somewhat bizarre news release put out by the U.S. Treasury Secretary Steven Mnuchin over the weekend.
Mnuchin said has been assured by the CEOs of the biggest banks in the country that their financial institutions have enough liquidity available for lending and meeting market operations. Liquidity is a just fancy word for cash.
There was in fact a big liquidity crisis in 2007 through 2008 before the Great Recession. But Wall Streeters don’t see any problems now.
“It’s a very weird statement, and it, frankly, unnerved a lot of market participants, who are like, does Secretary Mnuchin see something thing that we don’t see? Is there something that we’re missing because this just seems like a down market,” Lowrey said.
It’s a deeply down market. Monday’s Wall Street selling was fierce enough to send major market indexes into a bear market, which means they’ve fallen 20 percent from their highs. Market analysts are divided on where the market goes next, and whether or not stocks can recover. Wall Street’s stumble is impacting markets around the world. In Asia, they fell sharply Tuesday.