Dow drops 464 in worst December for stocks since ’31
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The worst December for stocks since 1931 keeps getting worse.
The Dow closed sharply lower again Thursday amid a negative reaction to the Federal Reserve’s latest interest rate hike and suggestion that two more increases are coming next year. Investors fear the continued rise in borrowing costs will cause the economy to slow.
The Dow Jones Industrial Average fell 464 points, or 2 percent, to a 14month low of 22,860. The technologypacked Nasdaq composite briefly slipped into bear market territory after dipping more than 20 percent from its late August peak.
And the broad Standard & Poor’s 500 stock index, which tumbled 1.6 percent, is now down 10.6 percent from the end of September, which marks its worst start to December since the Great Depression, according to Bespoke Investment Group. The large-company stock index fell 14.53 percent in December 1931, according to data from S&P Dow Jones Indices.
Investors, who are growing increasingly worried about the central bank causing a recession by boosting interest rates too aggressively, were disappointed in Fed Chief Jerome Powell’s decision Wednesday not to signal a halt to its
rate-hike plans next year.
Investors were keeping watch on contentious politics in Washington, D.C., which raised fresh fears that lawmakers might not be able to agree on a deal to avoid a partial government shutdown this weekend.
The S&P 500 is now down nearly 16 percent and deep in so-called “correction” territory, defined as a drop of 10 percent or more from a high. The current correction is worse than the average price drop of about 14 percent in corrections during the post-World War II era, according to data from CFRA, a Wall Street research firm.
The Nasdaq composite, which declined 1.6 percent Thursday, is now 19.5 percent below its August peak and is nearing an official bear market, or a decline of 20 percent or more from its record closing high of 8,109.69 on Aug. 29. The Russell 2000, a small cap stock index, already is in bear territory.