Wall Street tumbles before Fed meeting

The US stock market falls 500 points at the end of the trading day.

US stock trader Source: Bloomberg

Wall Street continues its downward spiral. The US stock market closed at its worst point in a year and a half.

The Fed driving investing fears

US investors are worried that the economy is entering a bear market. Two issues that should be independent of the US stock market are driving investors to sell off shares: the US Federal Reserve and the potential repeal of Obamacare.

The US Federal Reserve is having its winter meeting and is considering a rate hike. The potential raise in interest rates led US President, Donald Trump, to tweet in anger.

‘It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!,’ tweeted Trump.

Trump’s tweet against the Fed could backfire. The Federal Reserve could raise rates to prove its independence from the US president.

Michael Arone, chief investment strategist at State Street Global Advisors, warns that the Fed may raise rates despite Trump’s messages.

‘If the Fed doesn't raise rates, it will look like it's succumbing to the bullying of Trump's tweets,' said Arone.

Obamacare affecting Wall Street

The repeal of the Affordable Care Act, or Obamacare, is at issue in the US stock market. The law provided private health insurance to millions of US residents. Since a Texas judge ruled that Obamacare was unconstitutional, healthcare stocks have dropped. Investors are concerned how a potential repeal of the law will affect the shares of health insurance companies.

How bearish market could influence 2019

The sluggish US markets in December could have an impact on stocks in the new year and even beyond. Financial experts are concerned that this could turn into a long-term economic downturn.

‘Investors are zeroing in on this idea of slower growth for 2019. More people are worried about a recession in late 2019 or 2020,’ said Arone.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Change
Sell
Buy
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

All trading involves risk and losses can exceed deposits. Trading CFDs may not be suitable for everyone so please ensure that you fully understand the risks involved. All trading involves risk and losses can exceed deposits.