The Dow Jones Industrial Average has lost more than 800 points since the Fed decision on Wednesday and is down over 1700 points the past 5 sessions.
The broad-based S&P 500 slid 1.6 per cent to 2,467.16, while the tech-rich Nasdaq Composite Index slumped 1.7 per cent to 6,526.29.
Dow Dives to Lowest Point in 2018 After Fed Rate Hike
The Dow Jones industrial average suffered its worst week since the financial crisis amid further selling on Wall Street yesterday.
The three major indexes swung between losses and gains of more than 1 percent as fragile investor nerves were tested by news of turmoil in Washington and soothing comments from an influential Federal Reserve official. The S&P 500 is now down 7.7 per cent for the year and the Nasdaq is on the verge of a "bear market", which is a drop of 20 per cent from its peak this year.
The S&P 500 and the Dow, are both in correction territory (greater than 10% decline from recent top), and are also in a position to post their worst December performance since the Great Depression in 1931.
Stocks usually end the year with a flourish, and December is usually the best month of the year for the market. Markets tend to move, however, on what investors anticipate will happen well into the future, so it's not uncommon for stocks to sink even when the economy is humming along.
United States stocks closed lower on Friday as investors digested the latest economic data, speech from a central bank official, and the fact that the government is on the verge of a partial shutdown.
Wren said investors felt Fed Chairman Jerome Powell came off as unconcerned about the state of the US economy and fears that the economy could not just slow down, as expected, but go into a recession in 2019 or 2020.
Markets were also unnerved by comments from President Donald Trump's trade adviser Peter Navarro who told the Nikkei newspaper that it would be "difficult" for the USA and China to reach a long lasting trade agreement that would end the tensions between the two. The technology-driven NASDAQ Composite closed at 6528.41, down 108.42 or -1.63%.
Bond prices rose, sending yields lower.
Furthermore, another drop in oil prices drove down energy stocks. The index had risen as much as 1.5 percent at its session high. Benchmark U.S. crude fell 4.5 percent to $46.02 a barrel in NY. The yield on the 10-year Treasury finished today nearly a half percent lower than its recent October peak.