The Dow Jones Industrial Average continued its month long slump Monday, dropping another several hundred points in the stock market's opening hours. The fall continued a slump that has lasted throughout the month of December.
Many analysts blamed Monday's fall on some unexpected and apparently unprompted remarks from Secretary of the Treasury Steven Mnuchin about the health of the banking sector.
What's the story?
Stocks opened down on Monday, and by mid-morning the Dow Jones Industrial Average had leveled off at around 22,077, down over 350 points. Last week, the Dow lost 1,655 points, making it the worst week for the stock market since the financial crash of 2008.
Overall, for the month, the stock market has lost about 7.8% of its value during the month of December, meaning that this month could be the worst December for the stock market since the Great Depression.
What did Mnuchin say?
The Treasury Department issued a statement Sunday indicating that Mnuchin had met with the CEOs of some of the nation's largest banks, all of whom assured him that the markets were working properly and that they had sufficient liquidity to continue lending to consumers and businesses.
While the comments were intended to be reassuring, they appear to have spooked investors instead. While many investors were bearish on some sectors of the economy, there was no widespread concern that the markets were NOT functioning correctly, or that there was trouble looming in the banking sector.
Further, the statement's reference to an impending meeting with the country's top financial regulators caused jumpiness in the market, as no government regulatory action was anticipated prior to the statement.
Thus, Mnuchin's statement caused many to worry whether Mnuchin's statement indicated that the Secretary of the Treasury may, in fact, have information about the banking sector that SHOULD cause concern.
Many analysts promptly sent notes to clients warning that Mnuchin's statement may, in fact, have been a potential indicator of problems, which led to Monday's poor market performance. The markets will only be open half a day on Monday due to Christmas Eve.
Mnuchin is vacationing in Mexico and has not issued a further comment or clarification on his statement, or the reasons for it.