Stocks plunge amid shutdown chaos in Washington

Stocks plummeted Thursday as the federal government edged closer to a partial shutdown and traders braced for the impact of further Federal Reserve rate hikes.

The Dow Jones Industrial Average lost 464 points, or 2 percent, falling to a 14-month low, while the S&P 500 and Nasdaq Composite slid 1.8 percent and 1.6 percent, respectively. 

The Nasdaq’s losses briefly sunk the composite into a bear market — a 20-percent drop from its latest high-point.

The losses amplified a Wednesday decline triggered by the Fed hiking interest rates and projecting two further rate hikes in 2019.{mosads}

Traders had hoped the Fed would hint toward a pause in hikes, which suppress the stock market by driving up borrowing costs and squeezing corporate profit margins.

Thursday’s sell-off brought stocks to new lows for 2018. Without a rebound, stocks are on track for their worst December in decades. It would also represent the first time since the Great Depression that markets closed the year lower than they started.

Treasury Secretary Steven Mnuchin on Thursday called Wall Street’s reaction “completely overblown” and predicted a “very attractive investment market” in 2019.

“I think the market has overreacted, and U.S. equities are a tremendous value,” Mnuchin told Fox Business Network.

The battered stock market plunged further as President Trump signaled that he may not sign a funding extension to prevent a partial government shutdown starting Saturday because it does not fund his proposed border wall.

Speaker Paul Ryan (R-Wis.) told reporters after meeting with Trump at the White House on Thursday afternoon that the president would not sign the funding bill passed by the Senate on Wednesday night.

Trump voiced his frustration on Twitter earlier Thursday, writing, “When I begrudgingly signed the Omnibus Bill, I was promised the Wall and Border Security by leadership. Would be done by end of year (NOW). It didn’t happen! We foolishly fight for Border Security for other countries – but not for our beloved U.S.A. Not good!”

On Capitol Hill, House Republicans abruptly canceled a press conference as caucus members demanded that wall funding and disaster aid relief be included in the funding bill.

Updated at 4:19 p.m.