US stocks suffer worst week in a decade as ‘Santa rout’ sends Nasdaq into bear market

Wall Street suffered its worst week in a decade as a “Santa rout” plunged the Nasdaq into bear market territory last night.

The Nasdaq fell three per cent on another volatile day’s trading and has now fallen almost 22 per cent from its 29 August high.

The S&P 500 dropped 2.1 per cent and is now on track for its biggest percentage decline in December since the Great Depression and the Dow Jones slid 1.8 per cent, to its lowest level since October 2017.

A bad week ended with a late slide on Friday night after US trade adviser Peter Navarro said the US and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies.

That's definitely a weight on the market," said Shannon Saccocia, chief investment officer at Boston Private, of Navarro's comments. "For investors, there's a heck of a lot of small storms to be sailing ships through."

The threat of partial US government shutdown, which eventually took effect at midnight, also impacted stock throughout the day.

Lawmakers were unable to agree over the $5bn (£4bn) funding of President Donald Trump’s border wall with Mexico.

The FAANG group of momentum stocks fared poorly. Facebook shares tumbled 6.3 percent, Amazon slid 5.7 percent and Netflix sank 5.4 percent. Shares of both Apple Inc and Google parent Alphabet Inc dropped more than 3 percent.

Shares were temporarily boosted by New York Fed President John Williams said the Fed was open to reassessing its views.

The Federal Reserve raised interest rates earlier this week but despite flagging a series of economic risks, chairman Jerome Powell committed to two further increases next year.

But the relief provided from Williams’ comments, which suggested a difference of opinion within the Fed, was short lived as the government shutdown and more US-China woes compounded the Wall Street misery.