Treasury Secretary Steven Mnuchin’s plan to convene a call with his ‘plunge protection team’ failed to reassure markets – as the Dow Jones Industrial Average experienced an immediate 400-point drop Monday and other indexes fell.
The broader S&P 500 index was down 1.5 per cent in the first five minutes of trading Monday, when markets were set to close at 1 pm for Christmas Eve.
Within minutes of the opening bell, the Dow was down nearly 2 per cent.
Mnuchin on Monday is convening the Working Group on Financial Markets, known as the ‘plunge protection team’ via conference call.
The group, which includes the Fed board of governors, the head of the SEC, and the Commodities Futures Trading Commission, also convened during the 2009 financial crisis – although Mnuchin provided weekend assurances that the U.S. maintains ‘strong economic growth.’
Treasury Secretary Steven Mnuchin called six top US bankers on Sunday amid concerns over falling stocks
Trump’s Treasury chief will have to phone in long distance, as on Sunday he was revealed to be vacationing with wife Louise Linton in Cabo San Lucas, Mexico – although his boss President Trump was holed up in Washington with is wife down at Mar-a-Lago during a partial government shutdown.
His efforts to reassure markets are countering multiple other factors that have markets on edge. Among theme are interest rate hikes, the trade war with China, the government shutdown amid a standoff over Trump’s border wall, and chaos in the White House amid the the Mueller probe and the coming Democratic House takeover.
‘Today I convened individual calls with the CEOs of the nation’s six largest banks,’ Mnuchin said in a statement he released on Twitter Sunday.
“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business,’ he noted. During the calls, ‘the CEOs confirmed that they have ample liquidity available for lending,’ the Treasury said.
Mnuchin ‘also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly,’ the Treasury said.
The execs that Mnuchin – a former Goldman Sachs exec who is worth an estimated $300 million – dialed were the chiefs of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.
Mnuchin dialed banking chiefs from Mexico, where he is visiting his children. Here he is pictured with wife Louise Linton
U.S. stocks have fallen sharply in recent weeks on concerns over slowing economic growth, with the S&P 500 index on pace for its biggest percentage decline in December since the Great Depression
‘Today I convened individual calls with the CEOs of the nation’s six largest banks,’ Treasury Secretary Steven Mnuchin said on Twitter
Markets experienced their worst December since the Great Depression, and the year’s gains have been wiped out since October.
Trump has periodically railed against Federal Reserve chair Jerome Powell, but that did not prevent a Fed committee from raising the government’s key borrowing rate by 0.25 per cent last week.
But acting White House Chief of Staff Mick Mulvaney said on Sunday President
‘I think [Trump] put out a tweet last night specifically saying that he now realizes he does not have the ability to fire him,’ Mulvaney said ABC’s ‘This Week’ on Sunday.
ABC’s Jonathan Karl pointed out it wasn’t Trump who tweeted that but Treasury Secretary Steven Mnuchin.
‘Is that who tweeted? All right,’ Mulvaney said. ‘I talked to – I must have heard it – I did speak with the treasury secretary last night about a bunch of things, including the lapse in appropriations and the shutdown, and he did mention that to me.’
CNN and Bloomberg, citing unnamed people familiar with the matter, said that Trump was furious when the Fed raised the key borrowing rate on Wednesday and signaled it will continue to hike rates next year.
The Dow Jones Industrial Average closed the week with yet another steep decline, its worst week in 10 years.
The S&P 500 index is on track for its worst December percentage drop since the Depression.