S&P 500 falls to lowest level in more than a year

/ AP

The signs of a bear market

New York — Stocks sank sharply Monday, with the S&P 500 falling to its lowest level in more than a year and the Dow shedding nearly 500 points amid ongoing concerns about U.S. economic growth. The S&P 500 index is down more than 2 percent in 2018 and has fallen nearly 13 percent since setting a record high in late September.

The Dow and Nasdaq each fell more than 2 percent on the day and are both in the red in 2018. The Russell 2000 index of small-cap stocks is down 20 percent since it finished at its last record high at the end of August. Wall Street calls a 20 percent decline a "bear market," and it's considered a major downturn.

Obamacare ruling hits health stocks

Shares of health insurers and hospitals slumped after a federal judge in Texas ruled that the 2010 Affordable Care Act is unconstitutional. Hospital operator HCA dropped 2.5, while health insurer UnitedHealth lost 1.9 percent. Centene, a health insurer that focuses on Medicaid and the Affordable Care Act's individual health insurance exchanges, also lost ground.

Many experts expect the ruling will be overturned, but with the markets suffering steep declines in recent months, investors didn't appear willing to wait and see.

Retailers and technology stocks also sank. Some of the biggest losses are going to utilities and real estate companies, which have done better than the rest of the market during the turbulence of the last three months.

Fed set to hike interest rates?

The Federal Reserve is expected to raise interest rates again Wednesday, the fourth increase of this year. It's been raising rates since over the last three years, and investors will want to know if the Fed is scaling back its plans for further increases based on the turmoil in the stock market over the last few months and mounting evidence that world economic growth is slowing down.

President Donald Trump, who has repeatedly complained about the Fed moving to hike rates, renewed the attack Monday. He said in a tweet: "It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!"

The S&P 500's index of financial stocks is down 10 percent in the last month, worse than any other part of the market. For the year it's down 14 percent, much worse than the 4.2 percent decline in the S&P 500.

Trump: Federal Reserve thinks "our economy's too good"

Trade tensions flare

China and the United States clashed again over their respective trade policies Monday, as China criticized what it calls a "unilateralist and protectionist" approach to trade. The U.S. ambassador to the World Trade Organization said those critiques were unwarranted.

The two nations have been embroiled in a dispute over technology policy and other issues for most of this year. With no end to the conflict in sight, investors are growing more concerned that the tensions will drag down the already-slowing global economy.

First published on December 17, 2018

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