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22-Dec2018

US Markets end lower as government shutdown looms

The US markets end lower on Friday, sending the Dow Jones Industrial Average to its worst week since the financial crisis in 2008, down nearly 7 percent. The Nasdaq Composite Index closed in a bear market and the S&P 500 was on the brink of one itself, down nearly 18 percent from its record earlier this year. Sentiments were down-beat as traders kept an eye on developments on Capitol Hill, with a shutdown of several key government agencies just hours away. Ahead of a midnight deadline, lawmakers appear to be at an impasse over funding for President Donald Trump's controversial wall on the border with Mexico. The currently Republican-controlled House voted 217 to 185 in favor of a short-term spending bill, although the bill includes more than $5 billion for the construction of the wall opposed by Democrats. House Republicans took up the bill, which also provides $7.8 billion for disaster relief, after Trump said he would not sign a stopgap spending approved the Senate that did not include wall funding.

On the economic front, reflecting downward revisions to consumer spending and exports, the Commerce Department released a report showing slightly slower than previously estimated US economic growth in the third quarter. The report said real gross domestic product surged up by 3.4 percent in the third quarter compared to the previously estimated 3.5 percent jump. The pace of GDP growth had been expected to be unrevised. The increase in consumer spending, which accounts for about 70 percent of the economy, was downwardly revised slightly to 3.5 percent from 3.6 percent. Meanwhile, revised data released by the University of Michigan unexpectedly showed an improvement in US consumer sentiment in the month of December. The report said the consumer sentiment index for December was upwardly revised to 98.3 from a preliminary reading of 97.5. Street had expected the index to be unrevised. With the unexpected upward revision, the reading on consumer sentiment in December is above the final November reading of 97.5.

Beside, personal income in the US increased by slightly less than expected in the month of November, according to a report released by the Commerce Department, although the report also showed slightly stronger than expected personal spending growth. The Commerce Department said personal spending edged up by 0.2 percent in November after climbing by 0.5 percent in October. Street had expected personal income to rise by 0.3 percent.

Dow Jones Industrial Average plunged 414.23 points or 1.81 percent to 22445.37, Nasdaq plunged 195.41 points or 2.99 percent to 6333.00 and S&P 500 was down by 50.80 points or 2.06 percent to 2416.62.


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