December 10, 2018
Brexit chaos and sinking bank stocks are combining to deal the stock market another blow.The Dow fell as much as 500 points, or 1.9%, on Monday, tumbling below the 24,000 level. The S&P 500 retreated as much as 1.7%, while the Nasdaq lost 1%. Stocks came back just a bit late morning, when the Dow was down 350 points.US stocks hit session lows after Prime Minister Theresa May said she would delay a crucial vote on her Brexit deal.
The British pound extended its losses, plunging 1.6% against the US dollar. Sterling is on track for its worst close since April 2017.”We seem to have taken a turn for the worse because of the Brexit news,” said Mark Luschini, chief investment strategist at Janney Capital. “Any news that isn’t good is immediately treated as terrible.”Monday’s losses knocked the Dow and S&P 500 deeper into the red for the year. And the selling left the Nasdaq unchanged on 2018, wiping out huge gains recorded earlier this year.The Brexit chaos reinforces one of Wall Street’s biggest fears: slowing global growth.
Germany and Japan are already in economic contraction, while China’s economy has suffered from a wave of tariffs. A messy divorce between the UK and European Union is the last thing the global economy needs.FTSE 100 was down 0.4%. The FTSE 250, which has more companies focused on doing business in the UK, dropped 1.6%.”The big worry is economic growth,” said David Joy, chief market strategist at Ameriprise Financial. “Nobody knows what to make of the trade situation.”
The yield curve is flattening. But the party isn’t over yet. Concerns about growth and fluctuations in the bond market have slammed bank stocks.