The signature market turbulence of the past several weeks resumed Friday (US time) as stocks bobbed up and down before sliding deep into losses by the end of trading.
US stocks rebounded briefly after comments by a Federal Reserve official eased investor worries that the central bank was locked into raising rates in 2019. But an hour later, the Dow had given most of that up.
Then the political gridlock in Washington put the market in a downward spiral, as President Donald Trump held fast on his demands for more border security funding and Democrats resisted, and the government moved closer to a shutdown.
The Dow Jones industrial average lost 415 points, or 1.8 per cent, and closed at 22,443. The Standard & Poor's 500-stock index fell 2.1 per cent. And the tech-laden Nasdaq was off 3 per cent.
The so-called FAANG stocks were again wreaking havoc on the Nasdaq. Google parent Alphabet was down 3 per cent, Amazon down nearly 5 per cent, Facebook down more than 5 per cent, Netflix nearly 5 per cent and Apple was in the red less than 2 per cent.
"Technology is part of the same story as the overall market," said Scott Wren, global equity strategist at the Wells Fargo Investment Institute.
"The market is fearing a global slowdown and is still worried about the Fed, even though they dragged (New York Federal Reserve President John) Williams out to try to cushion what Chairman (Jerome) Powell said on Wednesday.
"Technology has been in the headlines with regulation and privacy concerns," Wren said.
"And we have technology companies that led on the way up, so it makes some sense that people are taking some money out of their winners."
In the morning, the Dow had jumped nearly 400 points after Williams told CNBC that the Fed would pay close attention to the economy as it considered raising rates in the future.
"We are listening. There are risks to that outlook that maybe the economy will slow further," Williams told Steve Liesman on CNBC's "Squawk on the Street."
Investors initially liked Williams' comments. The Dow was up more than 1 per cent, a brief respite to a week that put markets on pace for one of the worst months and quarters in recent memory. The Dow also got help from athletic wear giant Nike, which crushed earnings expectations.
By early afternoon, the Dow and Standard & Poor's 500 and the tech-heavy Nasdaq had all turned negative.
Fragile markets continue to react to a flood of news, from rate increases to plunging oil prices to an impending US government shutdown. Stocks are in the midst of their biggest weekly decline in nine months.
"It's wearing, to say the least, and certainly not good for investor confidence," said Ed Yardeni, president of Yardeni Research.
"The market volatility is being driven by computer algorithm trading programs that instantly buy or sell everything, depending on the news they are getting fed. There's too much news."
Asian and European markets were mostly down Friday, still reeling from the effect of Wednesday's US Federal Reserve announcement that it was lowering its 2019 growth forecast from 2.5 per cent to 2.3 per cent. The Fed boosted interest rates up a quarter-point to a range of 2.25 per cent to 2.5 per cent, the highest rate in more than a decade.
New Commerce Department data released Friday showed the US economy slowed more than expected in the third quarter, although the economy still appears to be robust. Gross domestic product, a metric that measures all goods and services produced in the United States, increased at 3.4 per cent annually, down from the 3.5 per cent estimated in October.
The Dow and the S&P 500 stock indexes are on pace for their worst month since 2009. All three indexes are headed for their worst annual drop in a decade.
The Dow has fallen 10 per cent from its September peak, wiping out all gains for the year.
Although it has pulled out of correction territory for the year, the Dow is still down nearly eight percent this year. The S&P is down more than eight percent in 2018.
The Nasdaq is nearing a bear market, which is a 20 per cent decline off its recent high. The tech-heavy index is down nearly seven percent for 2018.
Powell said at a news conference Wednesday that the economy remains "healthy" and "solid" and that he did not see any reason to sharply change the Fed's path of gradually pulling back support for it.
But he acknowledged the economy is showing signs of "softening" and that there is a "fairly high degree of uncertainty" about what the Fed will do.
Stocks have also been down on Powell's new conference, where he made it clear that the Fed will not shape monetary policy to support stock prices.
Yardeni said Fed officials need to get on the same page.
"Williams' calming words just demonstrate that the stock market has an unhealthy addiction to monetary policy," Yardeni said.
"Yesterday, investors were disappointed by Powell's press conference suggesting that monetary policy remained locked on a course of raising interest rates. Today, Williams said they will reassess in the new year.
"The Fed has done a pretty bad job of communicating their intentions," Yardeni added. "If they would just stick to the script that monetary policy is data dependent, without any set course, that is the message the market wants to hear."
Stocks sank nearly 500 points Thursday on the news that President Donald Trump would not sign the spending bill that would avert a partial government shutdown Friday night.
Also lurking are growing concerns about a slowdown in the global economy. Those worries are reinforced by a 30 per cent-plus decline in world oil prices since October.
Oil prices continued to drop Friday as new reports show demand for the commodity is dropping in high-growth economies such as India and China.
Capping the tumult was the White House announcement Thursday afternoon that Defense Secretary Jim Mattis, considered a rock-solid stabilising force in a frensied administration, had resigned. Mattis cited differences over Trump's decision to pull US troops from Syria.
John Lynch, chief investment strategist at LPL Financial, said the flurry of news is taking its toll on nervous investors, even though the overall economy is good.
"There's just confusion from the Fed, investor sentiment is fragile, and with the government shutdown, add the Mattis resignation, and it's been a parade of concerning news that increased investors anxiety Thursday," Lynch said.
LPL Financial's outlook for 2019 is 6 per cent to 8 per cent growth in corporate profits and U.S. economic growth between 2.5 per cent and 2.75 per cent.
"We are encouraging investors to focus on solid fundamentals," Lynch said.