Stocks dropped again Thursday on fears of a government shutdown, as the stock market continued to experience its worst December since 1931, during the depths of the Great Depression.
The Dow Jones fell 464 points, or 2 percent, to a 14-month low of 22,860. The Nasdaq has dropped more than 20 percent from its August peak. The S&P 500, a large-company stock index, fell 1.6 percent, for a total decline of 10.6 percent since September — its worst start to December since that month in 1931, when it fell 14.53 percent.
The Dow hit its lowest point on Wednesday and is close to realizing its worst annual return in a decade. The S&P is on track for its first losing year in 10 years.
Stocks are said to have entered “correction” territory when they drop 10 percent or more from a peak, or a “bear market” when they slide 20 percent or more.
Despite President Trump’s frequent boasts that the stock market reflects the health of the economy, the stock market actually functions as a futures index, reflecting investors’ optimism about seeing gains in the months to come. The Fed has raised interest rates four times this year, signaling it may do so twice more. That has made investors nervous that an economic slowdown will result from companies’ increased borrowing costs.
As the markets slide, Trump has expressed worry that it may cost him re-election in 2020, the Washington Post reported Thursday. “Ever since the 2016 election, Trump has pointed to market gains as proof that his economic policies are working and the country is thriving under his leadership. Now a favored talking point is crumbling,” the paper said.
Some financial experts say Trump’s policies are, in fact, responsible. “The market has lost confidence in the narrative coming out of the White House on the economy and trade,” said Joseph Brusuelas, chief economist at RSM.
The Dow Jones has performed significantly worse under Trump than at the same point in Barack Obama’s presidency. The Dow is up 18 percent under Trump, compared with 45 percent at this point under Obama, according to Bespoke Investments.
