Stock Selloff Deepens in Holiday-Shortened Trade; Dow Plunges 653 Points
U.S. stocks extended their slide ahead of the Christmas holiday, rounding out one of the most tumultuous period for markets since the 2008 financial crisis. Meanwhile, capital continued to pour into the cryptocurrency market as bitcoin and the major altcoins approached monthly highs.
Market Meltdown Continues
The selloff that has engulfed Wall Street for much of the fourth quarter intensified on Monday in a session that closed three hours early ahead of Christmas Eve. The Dow Jones Industrial Average plunged 653.17 points, or 2.9%, to 21,792.20. The index is down 11.1% on the year and is currently trading at its lowest level since October 2017. Dow industrials are coming off their worst weekly stretch in a decade.
The broad S&P 500 Index collapsed 2.7% to close at 2,351.10, its lowest since April 2017. Each of the 11 primary sectors tracked by the S&P 500 declined 2% or more. Utilities and energy shares plunged 4% or more on average. Industrials and consumer discretionary companies fell at least 3%.
Meanwhile, the tech-focused Nasdaq Composite Index fell deeper into bear-market territory, closing down 2.2% at 6,192.92.
A measure of implied volatility known as the CBOE VIX rose toward its highest levels of the year. The so-called “fear index” jumped 19.2% to 35.88 on a scale of 1-100 where 20 represents the historic average.
Mnuchin Falls Short
Treasury Secretary Steven Mnuchin was unable to allay investors’ fears after meeting with the chief executives of six large banks. As The Wall Street Journal noted, the purpose of the meetings was to ensure that the lenders had sufficient capacity.
Mnuchin made it known over the weekend that he intended to meet with the country’s major financial institutions. Rather than soothe investors’ concern, the meetings sent a strong signal that the government was worried about the direction of the market.
Although several factors have contributed to the months-long selloff in stocks, a decision by the Federal Reserve last week to continue raising interest rates has aided the downfall. Fed officials not only raised interest rates but signaled their intend to tighten monetary policy at least two more times next year.
Cryptos Remain Buoyant
Cryptocurrency prices have been largely immune from the latest whiplash on Wall Street. As of Monday afternoon, digital assets were collectively valued at $141.5 billion, recovering some $40 billion from their December lows. The market peaked at $147 billion earlier in the day.
Bitcoin was the primary catalyst for the gains last week, which triggered a much larger corrective rally for altcoins and tokens. The bitcoin price traded above $4,200 on Monday for the first time this month.
With the exception of bitcoin cash and bitcoin SV, all major cryptocurrencies reported gains on Monday. Ethereum notched fresh monthly highs, gaining 13.8% to $147.21. XRP also surged 13.5% to $0.4188.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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