Losses on Wall Street deepen amid Washington turmoil

Wall Street was heading for another rout early today amid turmoil in Washington, with the Dow losing as much as two percent after its worst week since the 2008 financial crisis.

At 15:25 GMT, the Dow Jones Industrial Average was at 22,124.44, down 1.4 percent after earlier sliding two percent.
The broad-based S&P 500 fell 1.3 percent to 2,384.14, while the tech-rich Nasdaq Composite Index shed 1.0 percent to 6,270.13.

The declines came as Treasury Secretary Steven Mnunchin was set to hold a telephone conference with top US market regulators, another effort to reassure market that analysts say may be backfiring.

On Sunday, the Treasury leader announced that he phoned top executives of the nation’s six largest banks and confirmed they have adequate liquidity.

But the statement “was not especially comforting however, given that investors had not generally been questioning market functioning in recent days, despite large declines,” said a note from Wells Fargo.

The Treasury Secretary on Saturday released a statement on Twitter quoting US President Donald Trump as denying any plans to  fire Fed Chairman Jay Powell following media reports that Trump had privately asked cabinet members if he has the authority to dismiss the Fed chief.

“It might be more reassuring if Trump himself tweeted these comments, but then again Trump has demonstrated his propensity to flip-flop on issues as he did with his stance on the current government shutdown,” said a note from Oxford Economics.

“If Trump tries to remove Powell, it could throw the financial markets into deep chaos that makes the current market turmoil look tame.”

Last week was the Dow and Nasdaq’s worst since the 2008 financial crisis.

Key drivers included upset at the Federal Reserve’s latest interest rate hike, the shock resignation of Defense Secretary Jim Mattis, the ongoing US-China trade war and a US government shutdown triggered Friday at midnight following unsuccessful budget negotiations between President Donald Trump and congressional Democrats.

Today’s session will close early ahead of tomorrow’s Christmas holiday when markets will be closed. Volume was expected to be light, which could sharpen trading moves.

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