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You’re A Mean One, Mr. Grinch: This Is The Worst December For Stocks Since The Great Depression

You’re A Mean One, Mr. Grinch: This Is The Worst December For Stocks Since The Great Depression

Doesn’t look like there will be a “Santa Rally” this year as the U.S. stock market is set for its worst December since 1931.

Do you remember the last time the stock market was this bad in December?

Probably not, as the Dow and S&P 500 are currently on track for their biggest December losses since the country was in the throes of the Great Depression.

The S&P 500 has lost nearly 8% of its value so far this month, eclipsing the 6% fall in December 2002. If it closes the month down that much or lower, it would mark the index’s worst performance since 1931, when the index closed down 15% for the month.

The same story is true for the Dow, which is down more than 7% since the start of the month – the index plummeted 17% in December 1931.

While the December 2018 market swoon isn’t as bad as what was seen in 1931, it’s still making investors nervous—and rightfully so—that earnings growth may have peaked this year and that the global economy could slow in 2019 as trade tensions with China persist and as fiscal tightening by central bankers worldwide continues.

The Dow and S&P 500 are both in the red for the year, and stocks are on track to have their worst annual loss since the Great Recession in 2008 and the first annual loss since 2015.

Stocks typically climb at year-end in what is known as the “Santa Rally,” a phenomenon in which stocks rise in December as investors are filled with optimism during the festive season.

The “Santa Rally” doesn’t always materialize, however, and 2018 is shaping up to be one of those years when Santa doesn’t come, with several analysts describing this year as “Grinch-like.”

This Grinch-y December has also been filled with multiple worried predictions for 2019.

Morgan Stanley believes the stock market could get even worse next year, and sees “a 50% or greater chance” that a recession will begin in 2019. The bank also said that the U.S. economy may slow more than markets are anticipating which could start the year with an even greater sell-off.

“At this point, the market is pricing in a material slowdown next year as sentiment and positioning have reached levels not seen since the last recession scare in early 2016,” Morgan Stanley‘s U.S. equity strategy team said.

Goldman Sachs also sees “a weaker expected macro backdrop in 2019” as well as continued fits of volatility in the new year.

Corporate CFOs are worried as well, with nearly half of all respondents in a survey by Duke University saying they believe a recession will start by the end of 2019, and with 82% saying the next recession will come before the end of 2020.

“The end is near for the near-decade-long burst of global economic growth,” John Graham, a director of the survey and finance professor at Duke’s Fuqua School of Business, said in a statement about the survey. “The U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods.”

“There’s a fear of weaker economic growth virtually everywhere, as the world emerges from quantitative easing and confronts tighter monetary policy,” said Greg Valliere, a political economist at Horizon Investments. “That, in a nutshell, is the greatest concern.”

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