Today the Dow Jones Industrial Average had its worst Christmas Eve in history, dropping more than 600 points, and U.S. markets are on track to an ignoble distinction, the worst December since the height of the Great Depression. This follows last week’s results, which were the worst single week results in the stock market since the 2008 financial crisis, as well as reports that 2018 has now more than lost all of its earlier gains, putting the year as a whole in the red. All of this is of course extremely somber news, amid which President Trump, who was anxious to take the credit when the markets were doing well, is now anxious to blame anyone and everyone other than himself for the precipitous drop.
Perhaps anticipating the further plummet that happened today, Treasury Secretary Steve Mnuchin had spoken with the heads of six major banks over the weekend in an attempt to reassure them that the markets were indeed stable. Mnuchin also sought to dispel reports that President Trump was trying to find out if he had the authority to fire Federal Reserve Chairman Jerome Powell, which, along with Trump’s trade war and the partial government shutdown, was also seen by many as a contributing factor in the plummeting markets. Mnuchin’s efforts appear to have backfired, however. According to The Hill:
The Dow Jones Industrial Average had its worst recorded Christmas Eve day of trading Monday, dropping more than 640 points, while the S&P 500 dropped more than 50 points and entered a bear market, a 20 percent fall from its peak in August…Markets are on track to have their worst December since 1931, at the height of the Great Depression. They are in the red for the entirety of 2018…The dismal Monday trading follows an attempt by Treasury Secretary Steven Mnuchin to reassure bankers about the market’s stability. Mnuchin said Sunday that he spoke with the heads of six major banks — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — but the unusual message may have backfired, with analysts noting that the group Mnuchin was calling together was the same as the “Plunge Protection Team” that met at the height of the 2009 financial crisis.
The Dow’s record Christmas Eve drop today was not just the case on a points basis, but also on a percentage basis. The second worst Christmas Eve performance on record was in 1985, according to The Hill, when there was a loss of 0.6 percent in the Dow, but today’s losses represent a much higher percentage, 2.9 percent.
President Trump was again quick to blame the Federal Reserve for the stock market plummet, saying today that the Fed is like a golfer who can’t putt. Of course Trump directing his ire at the Fed only contributes to the impression that reports Trump would like to fire Fed Chairman Powell are true, which is already a factor in the market drop. And golf metaphors only serve to remind people that Trump has spent an unprecedented amount of his time in office on the golf course.
Senate Democratic leader Chuck Schumer (D-NY) and House Democratic leader Nancy Pelosi (D-CA), who, along with the media, were present when President Trump said he would not blame Democrats for a shutdown (which Trump is now doing vigorously), blame Trump for “plunging the country into chaos”, according to The Hill, with both the shutdown and the stock market plummet in evidence. According to The Hill:
Senate Democratic Leader Charles Schumer (N.Y.) and House Democratic Leader Nancy Pelosi (Calif.) are blasting President Trump for “plunging the country into chaos” before Christmas, pointing to a sharp plunge in the stock market amid a government shutdown. “It’s Christmas Eve and President Trump is plunging the country into chaos. The stock market is tanking and the president is waging a personal war on the Federal Reserve — after he just fired the Secretary of Defense,” the Democratic leaders said in a statement shortly after markets closed.
Indeed, in an act of retribution for Defense Secretary James Mattis’s resignation, more specifically his resignation letter, Trump decided to remove Mattis effective at the end of the year instead of the end of February, which had been Mattis’s planned departure date. Mattis, through a spokesperson, has attempted to reassure the country that the transition will still be smooth, but one wonders how that can quite be accomplished in a matter of days instead of two months. Mattis’s departure is seen by many as yet another sign of the further destabilizing of the Trump administration. Thing are not going well in the country, to put it mildly, and while Trump may be trying to shirk responsibility, many even in his own party do see him as largely responsible for these problems.
Markets will reopen Wednesday after the Christmas holiday. We shall have to see if they fall further at that point. Of course there is some day to day variation, but overall projections appear somewhat dismal for a regain anytime soon of the losses made this year.