By Chloe Aiello
Stocks plunged on Thursday for the second day running, as the renewed threat of a government shutdown over the Christmas holiday weekend contributed to residual market weakness after the Fed's latest rate hike.
House Speaker Paul Ryan told reporters on Thursday that President Trump had refused to sign a stop-gap measure that would fund the government through the holiday weekend and up until Feb. 8. Although the short-term funding bill virtually breezed through the House and Senate, Ryan said Trump would not sign because it did not contain the $5 billion he has demanded for construction of a Southern border wall.
Ryan said leaders will continue to work on a solution that includes funding at the border. House Majority Leader Kevin McCarthy (R-CA) added that "we believe there is still time," according to CNBC.
During a Thursday press conference, Trump reiterated his commitment to building a border wall, a promise he made throughout his campaign in 2016.
"Every nation has not only the right but the absolute duty to protect its borders and its citizens," he said. "A nation without borders is a nation not at all. Without borders, we have the reign of chaos, crime, cartels, and believe it or not coyotes. I will not surrender this nation to the whims of criminal organizations who prey on the vulnerable, who hurt women and children, and who spread human misery and suffering. Human trafficking and massive drug inflow must also be stopped; it's at a tremendous level."
The tech-heavy Cheddar 50 Index, which measures the performance of Cheddar's 50 top companies, was down 1.92 percent at the close of trading on Thursday. Activision-Blizzard ($ATVI) and Facebook ($FB) were the only two stocks that closed up on the day. Twitter ($TWTR) was the index's biggest laggard, sinking more than 11 percent after short-seller Andrew Left of Citron Research called it "the Harvey Weinstein of Social Media" and set a $20 price target on the stock. In the Citron note, Left said he came to the conclusion Twitter was "toxic" for investors after reading a report from Amnesty International that said Twitter is "a platform where violence and abuse against [women] flourishes, often with little accountability.” Twitter on Wednesday closed at about $33 per share, but was trading around $29.20 per share after its losses on Thursday.
Meanwhile, the Dow Jones Industrial Index, S&P 500, and Nasdaq were all on pace for their worst quarterly drops in a decade, and the Dow and S&P were posting their worst Decembers since 1931. The Dow closed down about 2 percent, or 464 points. The S&P 500 dropped 1.6 percent and the Nasdaq closed out the day down 1.6 percent.
Fears of a government shutdown exacerbated market weakness following the Federal Reserve's decision on Wednesday to hike rates for a fourth time in 2018.
Critics, including Trump, have called for the Fed to halt its rate hikes out of fear higher borrowing rates could impact corporate earnings and stock values, but the Fed said "some further gradual increases" could be appropriate in the new year. The Fed also said it expected two interest rate hikes in 2019, down from the three it had projected in September, a sign that officials may be getting ready to stop raising rates amid concerns about slowing economic growth, but still more than investors were hoping for.