Stocks plunged again on Friday, sending the Dow Jones Industrial Average to its worst week since the financial crisis in 2008, down nearly 7 percent. The Nasdaq Composite Index closed in a bear market and the S&P 500 was on the brink of one itself, down nearly 18 percent from its record earlier this year.
The Federal Reserve's rate hike on Wednesday drove the losses this week and fears of an extended government shutdown only added to the pain on Friday.
The Dow Jones Industrial Average fell 414.23 points to finish at 22,445.37 in turbulent trading that sent the blue-chip index up as much as 300 points earlier in the day, only to trade back in negative territory less than one hour later. The initial rally upward on Friday came as Federal Reserve Bank of New York President John Williams told CNBC that the central bank could reassess its interest rate policy and balance sheet reduction in the new year if the economy slows.
But those gains slowly disappeared as investors used that short-term pop as a chance to sell more. The broader S&P 500 fell 2.1 percent on Friday to close at 2,416.58, while the tech-heavy Nasdaq Composite shed 2.99 percent to 6,332.99 with big losses in technology stocks including Facebook, Amazon and Apple.
Stocks accelerated to their lows after President Donald Trump's trade adviser, Peter Navarro, told Nikkei that it would be "difficult"for the U.S. and China to arrive at a permanent economic agreement after a 90-day ceasefire in the trade tensions.
Here's a tally of the carnage:
- The Dow lost 6.8 percent and 1,655 points on the week. It was its worst percentage drop since October 2008.
- The Nasdaq lost 8.3 percent on the week and is now 22 percent below its record reached in August, a bear market.
- The S&P 500 lost 7 percent for the week and is now down 17.8 percent from its record.
- The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 12 percent each this month.
- Both the Dow and the S&P 500 are now in the red for 2018 by at least 9 percent.
The selling had conviction. More than 12 billion shares changed hands on U.S. exchanges on Friday, the heaviest volume in at least two years. The expiration of options also added to the volume.
"The message people should take home, especially if there's a government shutdown, is that longer term, the prospects for equities are not good," said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. "There are lots of signs now suggesting that we may be looking at a recession. I would say that the risk here is that a whole lot of confluence is taking place: The trade was is not going to end soon, and the Fed totally misjudged the market in suggesting two more rate hikes next year."