As stocks fall into bear market territory, it’s Washington that’s getting the blame.
It was Wall Street that scared the markets as storied institutions failed during the financial crisis, and now as stocks fall into bear market territory, it’s Washington that’s getting the blame.
Making matters worse, is that when financial markets are in trouble, market pros turn to Washington’s lawmakers and regulators for help, and now they find no solace.
« Normally you would expect Washington to be the cure, then you’re remembering they are the cause, » said Sam Stovall, chief investment strategist at CFRA.
The Federal Reserve’s interest rate policy has taken the brunt of criticism for shaking up markets. In a Christmas Eve tweet, President Donald Trump said that the Fed is ‘the only problem’ the economy is facing. But strategists say the president too has become a source of volatility, and his once positive impact on stocks has now become mostly a negative.
The Trump administration over the weekend denied reports that the president wanted to fire Fed Chairman Jerome Powell. Even so, his long running critique of the Fed chairman has created anxiety for markets, and is also one of the many reasons Trump too has become a factor for uncertainty.
« The market can’t have it both ways. It doesn’t like Powell raising rates and it doesn’t like Trump threatening to remove Powell for raising rates. Nothing makes the market happy at this happiest time of the year, » notes Chris Rupkey, chief financial economist at MUFG.
Stocks Monday fell sharply in a half day session, with the S&P 500 now joining the Nasdaq in a bear market— a decline of 20 percent or more based on its intraday high. The S&P fell 2.7 percent to 2,351, in the worst Christmas Eve performance ever. For the month, the S&P is now down 14.8 percent in its worst December ever.
Strategists point to Trump’s actions in just the past few weeks, including his trade policy and comments about being a ‘tariff man’ after he met with Chinese President Xi Jinping.
