Wall Street swoons as government shutdown deadline looms

Dec. 20, 2018 / 6:59 PM GMT/ Source: CNBC.com

By Thomas Franck, CNBC

U.S. stocks tumbled for a second day Thursday after the Federal Reserve raised benchmark interest rates. The Dow Jones Industrial Average fell 550 points in mid-afternoon trading, bringing its two-day declines to more than 900 points. The S&P 500 fell 1.6 percent, and the Nasdaq fell 1.9 percent, dipping into bear market territory.

The moves Thursday came one day after the Fed decided to hike its benchmark overnight lending rate by one quarter point in the prior session. The Dow fell more than 350 points following the Fed’s decision and pushed the major indexes to new lows for the year.

For traders, the Fed’s statement and Chairman Jerome Powell’s subsequent press conference did not suggest that the central bank would slow its pace of rate hikes as quickly as some had hoped.

Investors were further on edge Thursday as Congress’s deadline to pass a government funding bill neared. The U.S. Senate on Wednesday approved funds for several federal agencies to keep them operating through Feb. 8 without the $5 billion to build a wall on the U.S.-Mexico border that President Donald Trump had demanded.

Also weighing on sentiment Thursday, the Trump administration and more than a dozen international allies condemned Beijing for what the coalition views as continued efforts by the Chinese to steal other countries’ trade secrets.

The mass reprimand against China’s actions represents a growing view that the Asian nation is defying international norms of fair economic practice. The U.S. and China are in the middle of a bitter trade dispute, with both nations slapping tariffs on billions of dollars worth of each others’ imported goods.

The Dow and S&P 500, which are both in correction territory, are on track for their worst December performance since the Great Depression in 1931, down more than 8 percent and 9 percent, respectively. The S&P 500 is now in the red for 2018 by 6.3 percent.