Nearing the end of the worst December since the Great Depression for the U.S. stock market, and the sharpest fall on record for Christmas Eve – continuing the theme of unpredictability – stocks performed one of the largest rallies in the decade since the Great Recession, surging nearly five percent the day markets reopened after Christmas. The good news in New York City comes as Washington, D.C. remains at a standstill on a deal to lift the partial government shutdown over the $5 billion President Donald Trump wants to construct his campaign promise of a U.S.-Mexico border wall.
According to Yahoo Finance, all but one of the S&P 500 companies finished in the day in the green as the index is on pace for its biggest percentage fall since 1931. The closely-watched Dow Jones Industrial Average had a record-setting day with more than 1,081 points gained during the trading session.
Yields on 10-year treasuries gained five basis points to 2.79 percent, and the two-year treasury rate added five basis points to 2.60 percent – after the high-yield bond market was edging towards junk status following being downgraded from “A” to “BBB” recently. The gains are welcome among investors who saw shades of the early years of the Great Recession that were sparked, in part, by similar bond conditions in November 2008.
The recently-volitile FAANG stocks also preformed well with an average of 6.4 percent gained over the day in the tech and social media industries, snapping a rout of continuous five percent falls during trading. Amazon led the way as their shares were pushed up 9.5 percent after reporting record holiday sales online.
Coming off a rout that plunged stocks by almost 20 percent, Treasury Secretary Steven Mnuchin was in close contact with at least six top U.S. banks amid the weeks-long stock market downturn, pulling in the “Plunge Protection Team” on Christmas Eve to help solve the sharp market decline.
After the U.S. central bank raised interest rates in early December – the fourth quarter-point raise in 2018 – President Trump criticized a familiar target, Federal Reserve Chairman Jerome Powell, with rumors that he may be on the way out as shakeups in the White House continue. However, Secretary Mnuchin and other directorates of the financial system have said that Chairman Powell’s job is “100 percent” safe.
On the other side, Mnuchin was criticized by those outside the Trump Administration for claims that he called the chief executives of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Wells Fargo to gauge market liquidity. Trump, however, expressed his confidence in his Treasury Department chief.