U.S. stocks edged lower Monday, pointing to a negative start to the trading week, amid a collection of risks. Investors preferred security bonds over stock purchases, dropping major indices by more than 2%. Risk aversion prevailed before the Fed’s monetary policy decision, expected on Wednesday, which could signal a pause in key rate hikes in 2019. New signs of slowing growth have worried investors, already affected by trade fights. In addition, health insurers plunged after a federal judge ruled that the “Obamacare” law was unconstitutional.
At closing, the Dow Jones Index lost more than 500 points (-2.11%) finishing at 23.592 points (after -2% Friday), its lowest level of 2018 at the close. The broad S & P 500 index ended down 2.08% at 2.545 pts (after -1.9% Friday) while the Nasdaq composite index fell 2.27% to 6.753 pts (after -2.26%). In Europe, the Euro Stoxx 50 yielded 0.9%, while in Paris, the CAC 40 lost 1.1% to 4.799 pts.
On Monday, two US macroeconomic indicators came out below expectations, fueling fears about growth. On the one hand, the New York Fed’s ‘Empire State’ manufacturing index stood at 10.9 in December, well below expectations as the consensus was at 21. On the other hand, the confidence index Real estate builders from the National Association of Home Builders (NAHB) confirmed the difficulties observed in recent weeks in this market. The NAHB index for December thus stood at 56, against a consensus of 61. In November, it had already plunged 8 points to return to 60.
On the political front, markets fear that Donald Trump will trigger a “shutdown” if Congress does not agree to finance the wall he intends to build between the United States and Mexico. The agreement must be reached before Saturday, but for now, the discussions seem to be delayed.