Dow closes worst week since 2008 financial crisis

In this Dec. 6 2018 specialist Peter Mazza works at his post on the floor of the New York Stock Exchange

However, selling set in by afternoon with some of the major technology firms - that led the market's rally earlier this year - experiencing some of the most bruising falls.

The Dow Jones Industrial Average tumbled 414.23 points, or 1.8 percent, to 22,445.37.

Technology and communication services stocks bore the brunt of the sell-off, falling 3.0 percent and 3.1 percent, respectively. They allow markets to remove speculative froth after a big run-up and give investors a chance to buy stocks at lower prices.

The skittishness started on Wednesday after the Fed approved its fourth rate hike of the year, raising its benchmark borrowing rate to a range of 2.25 percent to 2.5 percent.

The Dow Jones Industrial Average fell 379 points, or 1.6 percent, to 22,950.

The Nasdaq Composite Index was down 195.41 points, or 2.99 per cent, to 6,332.99. It's now down 17.5 per cent from its high of 2,930.75 on September 20.

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

"We see slowing economic and earnings growth and a carousel of concerns", said Keith Lerner, chief market strategist at SunTrust, in a note to investors Friday.

Dow Dives to Lowest Point in 2018 After Fed Rate Hike
Dow Dives to Lowest Point in 2018 After Fed Rate Hike

Profits have been extremely strong this year, thanks largely to tax cuts: earnings for the S&P 500 rose 21.7 per cent in the third quarter after a 25.2 per cent gain in the second quarter.

The Federal Reserve, for its part, was not fazed by recent market movements this week. Relative to their size, they also tend to carry more debt than larger companies, which could be a problem in a slower economy with higher interest rates. Growth in China for instance has weakened and the German economy had its first quarterly decline since early 2015.

The S&P 500, already on pace for its worst December since the Great Depression, hit its lowest since August 2017.

Past Nasdaq bear markets have lasted a long time and cut deeply.

The mid-cap S&P 400 also confirmed it is in a bear market. President Trump has threatened not to sign a Senate appropriations bill averting shutdown unless Congress agrees to $5 billion in extra funds for the USA southern border wall. The S&P 500 is trading at just 14.5 times next year's expected earnings.

The Nasdaq is down 570.40 points, or 8.3 per cent. For the last three years the Fed told investors weeks in advance that it was nearly certain to increase rates.

"The bond market has been telling us something for about a year, and that is there's not going to be much inflation and there's not going to be a sustained surge in economic growth", said Wren, of Wells Fargo.

Kevin McCallister is "Home Alone Again" in Google's hilarious new Christmas ad
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