U.S. stock futures fell slightly shortly after the open of trading Sunday evening as the market attempts to rebound from a brutal week that pushed the S&P 500 to the brink of a bear market.
Dow lost 1,655 points, or 6.8 percent, last week for its worst week since October 2008 during the financial crisis. The S&P 500 lost 7 percent for the week and is now down 17.8 percent from its record reached earlier in the year, putting it on the brink of a bear market. The Nasdaq Composite Index is now 22 percent below its record reached in August, a bear market.
Last Wednesday, the Federal Reserve raised its benchmark interest rate for a fourth time this year and Chairman Jerome Powell signaled the central bank would continue to unwind its balance sheet at the current pace. The two monetary tightening actions are driving the stock market declines, traders say.
Treasury Secretary Steven Mnuchin held calls on Sunday with the heads of the six largest U.S. banks in order to reassure nervous investors that the financial markets and economy were functioning properly.
“The banks all confirmed ample liquidity is available for lending to consumer and business markets,” the statement from the Treasury said.
“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business,” said Mnuchin added in the statement.
Late Friday, there was a report that President Donald Trump was discussing the possibility of firing Powell, a move that could undermine confidence in the U.S. financial system. Other media outlets later confirmed those reports, but Mnuchin sought to calm the fears that arose from those reports this weekend.
Mnuchin tweeted that he spoke with the president and Trump said he never suggest firing Powell and doesn’t believe he has the right to do so.
Also weighing on investor confidence is a government shutdown that will apparently drag on through at least Thursday.
Both the Dow and the S&P 500 are now in the red for 2018 by at least 9 percent. Some traders have suggested that the market has gotten to the point where a short-term bounce could occur, if only for technical reasons. Seasonally, this is usually a positive, or at least benign, time for the markets.
The NYSE closes early on Monday at 1 p.m. ET. The exchange is closed on Tuesday for Christmas day. Wednesday through Friday are normal trading days.
This is a developing story. Check back for updates.