Wall Street gifts its worst Christmas Eve plunge in history

Steve Tawa
December 24, 2018 - 6:32 pm
Traders work on the floor of the New York Stock Exchange.

Spencer Platt/Getty Images


PHILADELPHIA (KYW Newsradio) — Santa was nowhere to be found on Wall Street this Christmas Eve. 

The Dow Jones Industrial Average dived more than 650 points; the S&P 500 entered bear market territory, described by analysts as down 20 percent from its recent highs. 

Santa Claus rallies have been a fixture on Wall Street, according to Bob Manning of Morgan Stanley Wealth Management in Philadelphia. He said traditionally, portfolio managers take care of tax-loss selling early in the month, only to window-dress and make their portfolios look good for the new year.

"And they want to get a little bit of a jump on that," he said. "Typically, that results in some buying."

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While Christmas Eve usual brings good tidings, it didn't happen this time around.

"In fact, it was the worst Christmas Eve in the history of Wall Street," he added.

Manning said the current dynamic has it teed up for the worst monthly and yearly decline in a decade.

"The selling has been relentless. My goodness, we have to go back a long way — the 2008-2009 meltdown — to look at a time that was more volatile," said Manning.

The S&P 500 Index fell 2.7 percent, marking the first Christmas Eve that the broad-market benchmark has booked a loss of 1 percent or greater — ever. 

Like others, Manning scratches he his head about Treasury Secretary Steven Mnuchin's call to bank CEOs, who assured him that they are healthy and have "ample liquidity." He said that call, meant to assure, may have induced panic in the markets.

"That was something Wall Street did not expect, creating a level of uncertainty in a market that does not need more uncertainty," he noted.

Putting the oldest major market index declines into historical context: Both the Dow and S&P 500 are down more than 14 percent this month — on track for their worst December performances since the Great Depression in 1931.