Politics

US STOCKS-Wall St hits fresh year-lows on threat of govt shutdown, slowing growth

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* Indexes drop: Dow 0.74 pct, S&P 1 pct, Nasdaq 1.95 pct

* All three indexes were up more than 1 pct earlier

* Defensive stocks lead; tech and communication services lag

* Nike jumps after results top estimates, boosts S&P and Dow

* Fed's Williams says central bank open to reassessing views (Changes comment, adds details, updates prices)

By Medha Singh

Dec 21 (Reuters) - Wall Street fell in volatile trading onFriday, after a few failed attempts at a rally, led by a drop intechnology and other high-growth sectors, while defensive stocksrose amid concerns of slowing growth and a looming governmentshutdown.

The three major indexes swung between losses and gains ofmore than 1 percent as fragile investor nerves were tested bynews of turmoil in Washington and soothing comments from aninfluential Federal Reserve official.

The S&P 500, already on pace for its worst December sincethe Great Depression, hit its lowest since August 2017. The Dowfell to its lowest since October 2017, while the Nasdaq sank toa 15-month low, toying with bear market territory for the secondday in a row.

The defensive consumer staples .SPLRCS , utilities .SPLRCU and real estate .SPLRCR sectors logged gains of 0.1percent to 0.77 percent, while all the other eight S&P sectorsdeclined.

"Investors are looking for cover. Within equities, investorsare certainly gravitating towards the traditionally defensivesegments of the market," said Mike Loewengart, vice-president ofinvestment strategy at E*E*TRADE Financial in New York.

The technology index .SPLRCT sank 1.54 percent, whilecommunication services .SPLRCL , which houses high-growth namessuch as Facebook IncFB.O and Alphabet IncGOOGL.O , dropped2.2 percent.

President Donald Trump said there was a very good chance agovernment funding bill, which included funding for a wall alongMexico border, would not pass the Senate. Those worries werecompounded by the sudden resignation of U.S. Defense SecretaryJim Mattis.

"I think it's a confluence of all the known issues that theinvestors have been digesting for the last few weeks. We havethe prospect of a government shutdown today. We have more shakeups within the Trump administration," Loewengart said.

The markets got a lift earlier after New York Fed PresidentJohn Williams said on CNBC the central bank is open toreassessing its views and listening to market signals that theeconomy could fall short of expectations.

Williams' comments come after the Fed said on Wednesday itwould largely stick to its plan to keep raising interest rates,spooking investors already grappling with mounting evidence ofslowing growth and triggering the slide on Wall Street.

At 1:20 p.m. ET, the Dow Jones Industrial Average .DJI wasdown 169.07 points, or 0.74 percent, at 22,690.53, the S&P 500 .SPX was down 24.57 points, or 1.00 percent, at 2,442.85 andthe Nasdaq Composite .IXIC was down 127.58 points, or 1.95percent, at 6,400.83.

Adding to the mix was "quadruple-witching," when options onstocks and indexes as well as futures on indexes and stocksexpire, tending to raise volumes.

Helping stanch the bleeding on Friday was Nike IncNKE.N ,which jumped 6.2 percent after the company's quarterly resultsbeat Wall Street estimates on strength in North America. Thestock was the biggest driver of gains on the Dow and S&P.

The three main Wall Street indexes are already in correctionterritory, having fallen more than 10 percent from their recordclosing highs. They are closing in on bear market territory,which is marked when an index closes more than 20 percent belowits closing high.

Declining issues outnumbered advancers for a 2.52-to-1 ratioon the NYSE and a 3.32-to-1 ratio on the Nasdaq. The S&P indexrecorded no new 52-week highs and 102 new lows, while the Nasdaqrecorded four new highs and 659 new lows.

Medha.Singh@thomsonreuters.com medha.singh.thomsonreuters.com@reuters.net


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

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