Dow Hits a 2018 Low Over Fears of a Government Shutdown

US stocks sink after Fed rate hike, Dow swings over 700 points to close down 1.5%

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.

Equities hit their low for the day after U.S. House of Representatives Speaker Paul Ryan announced that President Donald Trump would not sign a temporary government funding resolution.

Some economists argue that the steep Wall Street sell-off does not reflect conditions in the wider economy, which grew at an annual pace of 3.4% in the most recent quarter.

At 2:15 p.m. Eastern time, the S&P 500 index was down 49 points to 2,456, its lowest since August 2017.

With December 21's losses, the Nasdaq has fallen almost 22 percent from its August 29 high.

At 1:20 p.m. ET, the Dow Jones Industrial Average was down 169.07 points, or 0.74 percent, at 22,690.53, the S&P 500 was down 24.57 points, or 1.00 percent, at 2,442.85 and the Nasdaq Composite was down 127.58 points, or 1.95 percent, at 6,400.83.

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Stocks usually end the year with a flourish, and December is usually the best month of the year for the market. 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 is on track for its first annual loss in a decade. The Nasdaq Composite Index fell into a bear market and the S&P 500 was on the brink of one itself, down almost 18 percent from its record earlier this year. And there are increasing signs the global economy is slowing, too.

On average, bull markets last 4.5 years.

The Russell 2000 gave up 118.73 points, or 8.4 per cent. The S&P 600 closed at 828.10 for a loss of -12.36 points or -1.47%.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.80 percent. That hasn't happened yet, but investors fear it will. Inversions are often taken as a sign a recession is coming, although it's not a flawless signal and when recessions do follow inversions in the yield curve, it can take a year or more. The current bull market has been going on for nearly 10 years. That sent the price of gold higher, and it gained 0.9 percent to $1,267.9 an ounce. The Dow also continued its week-long decline, closing at 22,445 after a wild spike that saw it shoot up 300 points before sinking below zero again. The euro fell back to $1.1369 from $1.1469 and the British pound slipped to $1.2639 from $1.2671.

-Gold lost 0.8 percent to $1,258.10 an ounce and silver fell 1.1 percent to $14.70 an ounce. Procter & Gamble lost 1.3 percent.

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