U.S. stocks nosedived on Monday, recording their sharpest losses in history on the eve of Christmas in a holiday-shortened session. The huge selloff saw the S&P 500 tumbling to the brink of a bear market. The volatile trading session also saw the Dow declining more than 600 points, while the Nasdaq gave up more than 100 points.
All three indexes have fallen for four straight sessions. Trading on the New York Stock Exchange closed at 1 p.m. EST on Monday and was closed on Tuesday for Christmas.
The Dow Jones Industrial Average (DJI) fell 2.9% to close at 21,792.20. The S&P 500 plummeted 2.7% to close at 2,351.10. The Nasdaq Composite Index closed at 6192.92, declining 2.2%. The CBOE Volatility Index (VIX) jumped 5.96 points or almost or almost 19.8% to close at 36.07 points, its highest close since Feb 5.
A total of 5.9 billion shares were traded on Monday, lower than the last 20-session average of 8.9 billion shares. Decliners outnumbered advancers on the NYSE by a 3.56-to-1 ratio. On Nasdaq, a 2.68-to-1 ratio favored declining issues.
How did the Benchmarks Perform?
The Dow gave up 653.17 points, recording its lowest close since Sep 7, 2017. The index sank more than 2%, following which it recovered almost all the day's losses only to fall more than 2% once again. Shares of Caterpillar, Inc. CAT declined 2.6%, while The Boeing Company BA lost 3.4%. Caterpillar has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
The S&P 500 lost 65.52 points, recording its lowest close since Apr 21, 2017. The index finished 19.8% below its Sep 20 closing high, marginally shy of the 20% threshold that is commonly considered a bear market. Utilities and energy were the biggest laggards. The Utilities Select Sector SPDR (XLU) and the Energy Select Sector SPDR (XLE) gave up 4.2% and 4.1% each. All the 11 major S&P 500 sectors ended in negative territory.
The tech-heavy Nasdaq shed 140.08 points, registering its lowest close since Jul 10,2017. The Nasdaq had officially entered bear market on Friday and is now down 23.6% from its record close on Aug 29. Shares of Amazon.com, Inc. AMZN declined 2.4%.
Fresh Fears Spook Markets Again
Markets have been rattled over the last few weeks. On Monday, a tweet from Treasury Secretary Steven Munchin stating that he has spoken to CEOs of six biggest banks of the country to assess the health of the banking system ignited new concerns. The tweet raised questions about the liquidity of these banks.
Moreover, multiple reports emerged saying that President Donald Trump is discussing how to remove Fed chair Jerome Powell from his position. Trump continued his to attack the central bank on Monday saying that the Fed is the "only problem" with the U.S. economy. Earlier, Defense Secretary James Mattis had said that his views don't align with that of Trump's and he would step down at the end of February. This further made investors jittery, leading to huge selloffs and making it's the worst trading session in history on the eve of Christmas.
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