Looming Government Shutdown, Fed Hikes Deepen Markets Losses
*By Chloe Aiello*
Stocks plunged on Thursday for the second day running, as the renewed threat of a government shutdown over the Christmas holiday weekend contributed to residual market weakness after the Fed's latest rate hike.
House Speaker Paul Ryan told reporters on Thursday that President Trump had refused to sign a stop-gap measure that would fund the government through the holiday weekend and up until Feb. 8. Although the short-term funding bill virtually breezed through the House and Senate, Ryan said Trump would not sign because it did not contain the $5 billion he has demanded for construction of a Southern border wall.
Ryan said leaders will continue to work on a solution that includes funding at the border. House Majority Leader Kevin McCarthy (R-CA) added that "we believe there is still time," [according to CNBC](https://www.cnbc.com/2018/12/20/ryan-says-trump-will-not-sign-senate-passed-bill-to-avoid-government-shutdown.html).
During a Thursday press conference, Trump reiterated his commitment to building a border wall, a promise he made throughout his campaign in 2016.
"Every nation has not only the right but the absolute duty to protect its borders and its citizens," he said. "A nation without borders is a nation not at all. Without borders, we have the reign of chaos, crime, cartels, and believe it or not coyotes. I will not surrender this nation to the whims of criminal organizations who prey on the vulnerable, who hurt women and children, and who spread human misery and suffering. Human trafficking and massive drug inflow must also be stopped; it's at a tremendous level."
The tech-heavy [Cheddar 50 Index](https://cheddar.com/videos/in-with-the-new-the-cheddar-50-index-adds-new-stocks-for-the-new-year), which measures the performance of Cheddar's 50 top companies, was down 1.92 percent at the close of trading on Thursday. Activision-Blizzard ($ATVI) and Facebook ($FB) were the only two stocks that closed up on the day. Twitter ($TWTR) was the index's biggest laggard, sinking more than 11 percent after short-seller [Andrew Left of Citron Research called it](https://citronresearch.com/wp-content/uploads/2018/12/Twitter-has-become-the-Harvey-Weinstein-of-Social-Media.pdf) "the Harvey Weinstein of Social Media" and set a $20 price target on the stock. In the Citron note, Left said he came to the conclusion Twitter was "toxic" for investors after reading [a report from Amnesty International](https://www.amnesty.org/en/latest/research/2018/03/online-violence-against-women-chapter-1/) that said Twitter is "a platform where violence and abuse against \[women\] flourishes, often with little accountability.” Twitter on Wednesday closed at about $33 per share, but was trading around $29.20 per share after its losses on Thursday.
Meanwhile, the Dow Jones Industrial Index, S&P 500, and Nasdaq were all on pace for their worst quarterly drops in a decade, and the Dow and S&P were posting their worst Decembers since 1931. The Dow closed down about 2 percent, or 464 points. The S&P 500 dropped 1.6 percent and the Nasdaq closed out the day down 1.6 percent.
Fears of a government shutdown exacerbated market weakness following the Federal Reserve's decision on Wednesday to [hike rates for a fourth time in 2018](https://cheddar.com/videos/markets-take-sharp-turn-down-after-fed-hikes-interest-rates).
Critics, including Trump, have called for the Fed to halt its rate hikes out of fear higher borrowing rates could impact corporate earnings and stock values, but the Fed said "some further gradual increases" could be appropriate in the new year. The Fed also said it expected two interest rate hikes in 2019, down from the three it had projected in September, a sign that officials may be getting ready to stop raising rates amid concerns about slowing economic growth, but still more than investors were hoping for.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
Starbucks’ AI barista aims to speed service and improve experience. Nick Lichtenberg, Fortune Business Editor, explains its impact on workers and customers.
