Thursday, 18 October, 2018

Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

Nellie Chapman | 11 October, 2018, 10:04

President Donald Trump slammed the Federal Reserve as "crazy" for its interest-rate increases this year in comments hours after the worst USA stock market sell-off since February. "They're so tight. I think the Fed has gone insane".

"I think we don't have to go as fast", the president said.

Despite Wednesday's sell-off, the S&P 500 would still need to more than double its losses.

The selloff came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets. The criticism is also unusual given that Jerome Powell, the Fed chairman, was appointed by Mr... "It's all about investors rethinking their exposure to stocks."Many of the biggest U.S. names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than four percent and Amazon, Nike and Microsoft shedding more than five percent".

"Clearly stocks are spooked by higher rates and maybe some inflation that seems to be creeping in", said Michael Farr, CEO of Farr, Miller & Washington.

Bourses in Paris and Frankfurt both lost more than two percent, while London fell 1.3 percent.

US stocks took their worst loss in eight months Wednesday, with the Dow Jones Industrial Average sinking 831 points and the Nasdaq composite logging its biggest loss in more than two years.

The tech-rich Nasdaq Composite Index plummeted 4.1 percent to finish the session at 7,422.05, its worst fall in percentage terms since the surprise Brexit vote in June 2016.

Fed Chairman Jerome Powell is aiming to extend the second-longest US economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth. "I think we don't have to go as fast".

Trump's comments echo his previous criticisms of recent months, which broke more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the USA central bank. The Fed has "gone insane", he said.

"It's shifting the tectonic plates", said Jack Ablin, chief investment officer at Cresset Wealth Advisors.

"I believe this selling is an overdone panic", Feinseth said. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.