The US stock market has finished a week-long downward spiral that has many investors fearing a recession is on the way. Barring a Christmas miracle, this could be the worst December the market has had since the Great Depression.
The Nasdaq led Friday’s plunge, dropping three percent for a total week’s loss of 8.3 percent, breaking August’s record low. The Dow also continued its week-long decline, closing at 22,445 after a wild spike that saw it shoot up 300 points before sinking below zero again. The index broke 23,000 in its downward slide for the first time in over a year on Thursday and shows no sign of bouncing back anytime soon, having lost a total of 1,655 points in its worst week since October 2008.
The S&P 500 closed down 2.1 percent, finishing at 2,416 for the day. Driven low by drops in technology stocks like Facebook and Amazon, the index was down a full seven percent for the week.
The Dow and the S&P are both headed for 1930s territory, having fallen over 12 percent each this month. The indexes, which have had their worst early December since 1980, are now down more than nine percent for the year.
Several factors are driving the gloomy numbers, which kicked off with Wednesday’s interest-rate hike by the Federal Reserve – the fourth this year, and a move US President Donald Trump condemned as a “mistake” – and worsened with confirmation of an impending government shutdown as Congress has repeatedly failed to reach an agreement over funding for the president’s border wall. A $5.7 billion funding bill that passed the House yesterday is stuck in the Senate with nowhere to go, meaning federal agencies will begin shutting down at midnight on Friday.
Alan Greenspan, the former Fed chairman, declared the end of the bull market that Trump has enjoyed for most of his presidency, warning investors to “run for cover” and brace for a massive market correction earlier this week. Janet Yellen, the most recent Fed chairperson, has also revised her economic forecasts downward, having warned of a looming corporate-debt crisis earlier this month.