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Wall Street slides on Fed plans; Dow falls 464 pts, Nasdaq drops 108 pts

Gloomy corporate results and forecasts also weighed on US stocks

Reuters  |  New York 

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A souvenir license plate is seen outside the New York Stock Exchange in Manhattan, New York. Photo: Reuters

slid on Thursday, with the on the cusp of confirming bear market territory, as the Federal Reserve's plan to continue its balance sheet reduction and the threat of a partial government shutdown fuelled investor anxieties.

At its session low, the had tumbled 2.85 per cent, pushing the tech-heavy index more than 20 percent below its Aug. 29 closing high. The index, along with the Dow and the benchmark S&P 500, pared losses as the session continued. The ended down 19.5 percent from its closing high, just shy of confirming a bear market.

The Fed's move on Wednesday to largely adhere to its plan for more rate hikes over the next two years and keep its balance sheet reduction plan on "autopilot" spooked investors already worried about slowing economic growth.

"This is primarily just a follow-through from yesterday's selling," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "The market is just upset about the whole aspect of balance sheet normalization."

Adding to the gloom was the possibility of a partial US government shutdown on Friday. President Donald told Republican congressional leaders he will not sign a government funding bill because it fails to include enough funding for border security.

"For 2019, I suspected there was going to be antagonism between the House (of Representatives) and the White House," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "This is only a partial government shutdown, but if (Trump) is going to be obstinate, that's not a good sign for next year."

The Industrial Average fell 464.06 points, or 1.99 percent, to 22,859.6, the S&P 500 lost 39.54 points, or 1.58 percent, to 2,467.42 and the Nasdaq Composite dropped 108.42 points, or 1.63 percent, to 6,528.41.

Of the S&P's 11 major sectors, only utilities ended in positive territory. Energy stocks slid 2.8 percent as oil prices dropped to their lowest levels in a year.

Technology and consumer discretionary stocks - among the top contributors to Wall Street's gains in the past few years - registered heavy declines.

Gloomy corporate results and forecasts also weighed on

Shares of Walgreens Boots Alliance Inc dropped 5.0 percent on the drugstore chain's weak retail sales, while shares of Conagra Brands Inc slid 16.5 percent after the packaged foods maker gave an underwhelming profit forecast for 2019.

Also declining as a result of disappointing corporate earnings forecasts were shares of Accenture Plc and Carnival Corp , which fell 4.9 percent and 9.5 percent, respectively.

Nike Inc shares dropped 2.1 percent ahead of the athletic footwear company's quarterly results, expected after Thursday's market close.

Declining issues outnumbered advancing ones on the by a 3.97-to-1 ratio; on Nasdaq, a 3.41-to-1 ratio favoured decliners.

The S&P 500 posted no new 52-week highs and 175 new lows; the Nasdaq Composite recorded three new highs and 858 new lows.

Volume on US exchanges was 12.02 billion shares, compared with the 8.37 billion-share average over the last 20 trading days.

First Published: Fri, December 21 2018. 02:52 IST