Robert Reich
The market continues to slide into dangerous territory. The Dow and the S&P 500 are on pace for the worst December since the Great Depression. Globally, world markets have lost nearly $7 trillion in 2018, making it the worst year since the financial crisis.
Why have the markets soured? Trump’s tax cuts, which at first fueled a temporary frenzy in the stock market, have already worn off. Corporations plowed most of their savings in buying back shares of their stock — lining the pockets of executives, but providing no real benefit to the economy.
Meanwhile, Trump’s trade wars have made matter worse, causing the entire global economy to shake. His clash with China has been especially damaging, pitting the world’s two largest economies against each other. In other words, brace for impact.
The stock market is on pace for its worst December since the Great Depression
Michael Sheetz December 18, 2018
Two benchmark U.S. stock indexes are careening toward a historically bad December.
Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931, when stocks were battered during the Great Depression. The Dow and S&P 500 closed down 7.6 percent and 7.8 percent this month, respectively.
December is typically a very positive month for markets. The Dow has only fallen during 25 Decembers going back to 1931.
The S&P 500 averages a 1.6 percent gain for December, making it typically the best month for the market, according to the Stock Trader’s Almanac.
While the S&P 500 began dissemination in 1950, the performance data was backtested through 1928. It’s worth noting that historically, the second half of December tends to see gains.
– CNBC’s Gina Francolla contributed to this report.