Stocks near bear market in worst week since ’08 financial crisis

U.S. stocks fell to the lowest since April 2017 as the turmoil in Washington rattled financial markets anew, pushing the S&P 500 to the brink of a bear market and marking the worst week for equities since the 2008 financial crisis.

The Dow closed down 653 points Monday, while the S&P 500 fell 2.7%. The index is now down more than 19.8% from its September record and on pace for the worst monthly drop since 2008.

Michael Nagle/Bloomberg

Investors looking to Washington for signs of stability that might bolster confidence instead got further rattled. President Trump blasted the Federal Reserve, blaming the central bank for the three-month equity rout days after Bloomberg reported he inquired about firing Chairman Jerome Powell. His comments came after Steven Mnuchin called a crisis meeting with financial regulators, who reportedly told the Treasury secretary that nothing was out of ordinary in the markets. Traders also assessed the threat to the economy from a government shutdown that looks set to persist into the new year.

“I don’t know that you can read too much into the market’s reaction today but it’s signaling they’re not impressed,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “If we were up, I’d potentially say the message he was sending was well received, but it seems like now they’re largely ignoring that message.”

Combined with an ongoing trade war, higher borrowing costs and signs of a slowdown in global growth, the political turmoil has raised the specter of a recession.

“The reality is, in Washington, you have this massive amount of unpredictability,” said Chad Morganlander, portfolio manager at Washington Crossing Advisors.