Wall Street falls to end volatile week for stocks

The US stock market swings wildly and ends on a negative note for the month.

Wall Street sign Source: Bloomberg

Wall Street erased earlier gains to plummet 200 points. The US markets are reeling after a rough week as the US electronic stock exchange National Association of Securities Dealers Automated Quotations(NASDAQ)nears bear territory.

US government shutdown weighs on markets

The potential US government shutdown will affect many federal services. Marc Goldwein, senior vice president for the Committee for a Responsible Federal Budget, noted that it could impact pivotal public services.

‘Most services will continue, but national parks may be shut down, safety inspections (for example, for hazardous waste and drinking water) could be halted, and the IRS may not be able to process taxes and refunds,’ said Goldwein.

US President, Donald Trump, has refused to sign a spending bill because many members of Congress won’t provide funding for a US-Mexico border wall. Because of the political stalemate,the US government will possibly come to a standstill. A lengthy stoppage could impact Wall Street.

Are US stocks in bear territory?

Because of the uncertainty around the US government and the US Federal Reserve raising interest rates, Wall Street stocks have tumbled. This December has been the worst for the US stock market since the Great Depression. Financial experts like Komal Sri-Kumar, president of Sri-Kumar Global Strategies, is concerned that Wall Street is heading for a bear market because of the Fed's actions and because of the prolonged downturn in stocks.

'The message people should take home, especially if there's a government shutdown, is that longer term, the prospects for equities are not good. There are lots of signs now suggesting that we may be looking at a recession. I would say that the risk here is that a whole lot of confluence is taking place: The[US] trade war [with China] is not going to end soon and the Fed totally misjudged the market in suggesting two more rate hikes next year,' said Sri-Kumar.

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