U.S. Treasury Secretary Steven Mnuchin called CEOs of six major banks on Dec. 23, in a perceived attempt to stabilize volatile financial markets.
U.S. stocks have dropped significantly in recent weeks because of concern over slowing economic growth, with the S&P 500 index on track for its biggest percentage decline in December since 1931.
Health care, technology, and industrial stocks took some of the biggest losses in the broad sell-off on Dec. 24, with the Dow Jones Industrial Average falling 653.17 points, or 2.91 percent, to 21792.20. The S&P 500 fell 65.52 points, or 2.71 percent, to 2351.10, while the Nasdaq slumped 140.48 points, or 2.21 percent, to 6192.92.
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Increased interest rates, a partial government shutdown, concerns about the U.S.-China trade dispute, and signs that economies in Europe and China are slowing, have all factored into stock market unrest.The Treasury said in a statement that Mnuchin talked with the leaders of Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, who all confirmed they have ample money to finance their normal operations, haven’t experienced any clearance or margin issues, and that the markets continue to function properly.
“Today, I convened individual calls with the CEOs of the nation’s six largest banks,” Mnuchin wrote on Twitter. “See attached statement.”
Corporate credit markets have also been under pressure, and measures of the investment grade corporate bond market are poised for their worst yearly performance since 2008.
Trump has criticized the U.S. central bank for raising interest rates this year, which could further dampen economic growth.
“The only problem our economy has is the Fed,” Trump wrote on Twitter. “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch - he can’t putt!”
The Federal Reserve raised short-term interest rates by 25 basis points on Dec. 19 for the fourth time this year, to a range of 2.25 percent to 2.50 percent, and predicted two more rate hikes in 2019.
Rumors circulating that Trump is allegedly considering firing Fed chairman Jerome Powell were dismissed by Mnuchin on his Twitter account.
“I have spoken with the President @realDonaldTrump and he said ‘I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time, especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so,’” Mnuchin wrote.
The Treasury said Mnuchin would call on the president’s Working Group on Financial Markets on Dec. 24, which includes Washington’s main agents of the U.S. financial system, officials from the Federal Reserve as well as the Securities and Exchange Commission.
The New York Stock Exchange is closed on Dec. 25 and will reopen Dec. 26.
