U.S. stocks fell to the lowest since May 2017 as the turmoil in Washington kept investors on edge after the worst week for American equities in almost a decade. Crude sank below $45 a barrel and the dollar tumbled.
The S&P 500 slid for a fourth day, edging ever closer to a bear market after breaking below 2,400, while the Dow dropped more than 300 points. The broader index is down 14 percent this month, headed for its worst December since the Great Depression. Trading in S&P 500 stocks was 40 percent above the 30-day average on a day that's normally subdued ahead of the Christmas holiday.
Investors looking to Washington for signs of stability that might bolster confidence instead got further rattled. President Donald Trump blasted the Federal Reserve, blaming the central bank for the three-month equity rout days after Bloomberg reported he inquired about firing the chairman.
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The comments came after Steven Mnuchin called a crisis meeting with financial regulators, who reportedly told the Treasury secretary that nothing was out of ordinary in the markets. Traders also assessed the threat to the economy from a government shutdown that looks set to persist into the new year.
"I don't know that you can read too much into the markets reaction today but it's signaling they're not impressed," said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. "If we were up, I'd potentially say the message he was sending was well received but it seems like now they're largely ignoring that message."
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The tumult in Washington over the weekend did little to placate U.S. equities that careened to the worst week in nearly a decade after the Federal Reserve signaled two more rate hikes in 2019. The S&P 500 on track for the steepest quarterly drop since the financial crisis. Combined with the ongoing trade war, higher borrowing costs and signs of a slowdown in global growth, the political turmoil has raised the specter of a recession.
"The reality is, in Washington you have this massive amount of unpredictability," Chad Morganlander, portfolio manager at Washington Crossing Advisors, said on Bloomberg TV. That combines with concerns over global growth and removal of stimulus "gives investors this level of chill where they're going to compress multiples regardless of what the backdrop in 2020 will be," he said.
U.S. stock markets close at 1 p.m. Monday in New York, ahead of the Christmas holiday, while Treasury trading ends at 2 p.m.
Elsewhere, emerging market currencies and shares fell even as China's top policy makers said they'll roll out more monetary and fiscal support in 2019, ratcheting up the targeted stimulus of 2018. Oil dropped even as some OPEC members pledged to deepen output cuts. The euro advanced against the dollar.
