Dow plunges and Nasdaq nears correction because stock-market investors don’t see a Christmas cavalry coming to the rescue – MarketWatch
There is a pervading sense on Wall Street that there may be little this week to counter an onslaught of selling ahead of Christmas.
Markets were trading sharply lower Monday to start a truncated week of trading, a period that is notoriously known for thin volumes, which can lead to outsize price swings.
The Dow Jones Industrial Average
DJIA,
-1.23%
was down more than 600 points at its low, the S&P 500 index
SPX,
-1.14%
closed down 1.1% and the Nasdaq Composite Index
COMP,
-1.24%
declined 1.2% lower bringing it down nearly 7% from its Nov. 19 record close and putting it in range to mark a 10% correction. (Equities finished off their worst levels of Monday’s selling)
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Concerns around the spread of omicron and further COVID lockdowns and new travel restrictions in parts of the world, however, were raising concerns that the market might be headed for a particularly downbeat trading stretch, with little support expected from monetary policy nor fiscal support from the government on the way soon.
Check out: These are the big levels to watch for the S&P 500 and Nasdaq. Expect ‘wild trade,’ if they break, warns this strategist.
Lending some support to that notion, President Joe Biden’s nearly $2 trillion spending plan was in dire straits after Sen. Joe Manchin, D-W.Va., said on Sunday that he cannot support it—potentially handing Biden and Democrats a major political loss and creating doubts about the degree of fiscal stimulus that the economy and markets could see headed in to 2022.
Analysts at Goldman Sachs viewed the lack of progress toward Biden’s Build Back Better initiative as potentially damaging to U.S. gross domestic product. Goldman downgraded the U.S. growth forecasts for 2022, citing the challenges in negotiations.
Read: Cathie Wood says stocks have corrected into ‘deep value territory’ and won’t let benchmarks ‘hold our strategies hostage’
On top of that, the Federal Reserve appears ready to raise interest rates three times in 2022 to combat out-of-control inflation, with benchmark federal funds rates standing at a range between 0% and 0.25%. And there is an increasing sense that tighter monetary policy—i.e., higher borrowing costs for individuals and corporations—comes at an inopportune time in an attempted recovery from the COVID pandemic that has persisted for more than two years so far.
Other central bankers (with the major exception …….