Coal in Wall Street’s Stocking? Stocks Crumble to 14-Month Lows

One day after the market got crushed in part due to the Fed’s rate hike and outlook, major indices again plunged and fell to 14-month lows as a possible government shutdown seemed to loom.
6 min read

Key Takeaways

  • Another bleak day on Wall Street with new 14-month lows

  • Government shutdown fears might be hurting market

  • Weak crude, continued Fed worries also seem to weigh

(Thursday Market Close) Whether it’s the Fed hinting at more rate hikes or Congress talking about a possible shutdown in Washington, it seems like the market just can’t catch a break this week.

One day after getting rattled by the Fed raising rates and sounding less dovish about 2019 than some investors might have hoped, the market fell another 2% Thursday as a budget agreement appeared to unravel in Washington. Weak guidance from Conagra (CAG) might have been another factor driving stocks down to new lows for the year and to their lowest levels in 14 months, while another bleak day in the crude market continued to drive fears of possible declining economic activity around the world.

There weren’t too many other headlines today to account for the big plunge, and shutdowns haven’t really hurt the market much in the past. Still, it was another sign of political uncertainty that some bearish investors could potentially hang their hats on, along with the ongoing China tariff battle and the unresolved Brexit situation.

Looking at it from a sector perspective, only utilities saw any gains Thursday. Consumer discretionary was the worst performer, dropping more than 2%, but consumer staples wasn’t far behind due in part to pressure from a double-digit drop in CAG shares. The food packaging company reported mixed results for the quarter, but it appears to be its guidance that might have really hit shares. 

Who Will Buy?

With the S&P 500 (SPX) down about 14% from the all-time high posted last fall as it entered Thursday’s session, there just hasn’t seemed to be much buying interest lately. That appeared to be the case again Thursday, with few people apparently willing to step up and catch what lately has been a falling knife. That could help explain why markets keep plunging every day. Even in normal times, there are always people selling, but in normal times, more people are ready to buy. That’s apparently not happening so much these days.

One school of thought claims that the Fed is partially responsible for this because it continues to see two rate hikes last year and many in the market had come into yesterday hoping for one or none. On the other hand, the Fed also said a lot of good things about the economy, and the market didn’t seem to listen. 

Wherever people might stand on that issue, it does seem to be the case, more often than not, that when Fed Chair Jerome Powell speaks, the market goes down. It hasn’t happened every time since he took over the top position early this year, but perhaps often enough that investors might want to consider being extra careful on days when Powell is on the calendar. The fact is, Powell is going to be holding press conferences at every Fed meeting from now on, so that might suggest more volatility ahead, at least based on past experience.

Speaking of volatility, there’s no break from that, either. The VIX “fear gauge” jumped double-digits to above 28 today, the highest it’s been since October.

First Signs of Panic, But That’s Not Necessarily All Bad

Ever since the market started getting soft in October, it’s been a pretty orderly process on the way down. Selling has mostly been slow and methodical as the S&P 500 Index (SPX) dropped hundreds of points from highs above 2940 less than three months ago to where it is now hovering below 2500.

That changed on Thursday in a big way. We saw panic today, and when things get panicked, it can sometimes indicate chances of a sell-off losing steam. That’s not to say there’s been a bottom, only that the market did come back pretty strongly late in the session in a kind of whip-saw move before getting slammed again in the very last minutes.

People sometimes ask how one defines panic. Well, it’s like Supreme Court Justice Potter Stewart once said about another subject: It’s hard to describe it, but know it when you see it. When the SPX fell quickly on Thursday from being down 30 points to suddenly being down 60, panic seemed evident.

Some might be surprised to hear this, because maybe it feels like the market has been panicking for weeks. That’s understandable. However, the methodical, orderly pattern held up until Thursday.

That raises the question of what’s next? Looking ahead to next week, we have a holiday-shortened trading schedule and probably some thin volume. While there aren’t any guarantees, thin volume can sometimes be a precursor for upward activity. When investors return from the next two holiday weeks to a new calendar year, they’ll get some data almost immediately on December payrolls and wages. 

After that, we’ll start to see earnings. The bulls are likely hoping that CEOs could come on the earnings calls and say things aren’t as bad as they look. Of course, it could go the other way. Either way, it’s arguably important to get to earnings, because even though data is nice to have, it’s backward looking. At this point, with stocks getting buried almost every day, some forward-looking perspective from the corporate world might be useful. Companies have been saying lately that they’ve seen strong business in the U.S. but slowing activity overseas, so investors might want to consider staying tuned to see if there’s any change to that and whether CEOs see opportunity once earnings season gets underway in mid-January.

Getting back to Thursday and looking for positives, it might be constructive that the dollar index fell moderately to below 97. Recently, a strong dollar has arguably been one weight on the stock market. The Fed backtracking from a three-hike outlook down to two for next year might have helped provide some of the greenback pressure.

At the same time, 10-year Treasury note yields clawed back to 2.8% after falling under that level for the first time since May. There’s been some talk lately that the 45-basis point fall in yields over the last three months or so might be a boost for the home builder market, and sure enough, those stocks have flattened out a bit lately after getting slammed for weeks. Also, emerging market stocks seem to be seeing signs of a possible rebound, but any chance for that probably depends on some sign of major progress in the China tariff situation.

Figure 1: As Stocks Plunge, So Do Yields: This year-to-date chart of the 10-year Treasury yield (candlestick), shows yields rallying to decade highs in the summer only to plunge back to six-month lows this week. At the same time, the S&P 500 (SPX) has had an even harder time of late. Data Sources: Cboe Global Markets, S&P Dow Jones Indices.  Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Good Trading, 



Helpful Educational Content and Programming

  • Check out all of our upcoming Webcasts or watch one of the many archived ones, covering a wide range of topics from market commentary to portfolio planning basics to trading strategies for active investors. No matter your experience level, there’s something for everybody.
  • Looking to stay on top of the markets? Check out the TD Ameritrade Network, which is live programming that brings you market news and helps you hone your trading knowledge 

TD Ameritrade Network is brought to you by TD Ameritrade Media Productions Company. TD Ameritrade Media Productions Company and TD Ameritrade, Inc. are separate but affiliated subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Media Productions Company is not a financial adviser, registered investment advisor, or broker-dealer.

Economic calendar for week of Dec. 17. Source:

Key Takeaways

  • Another bleak day on Wall Street with new 14-month lows

  • Government shutdown fears might be hurting market

  • Weak crude, continued Fed worries also seem to weigh

Call Us

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.  

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold..

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2019 TD Ameritrade.

Scroll to Top