Dow falls more than 1,000 in biggest daily point-drop ever

The Dow Jones Industrial Average fell by more than 1,179 points Monday, the biggest daily loss by points in its history.

The Dow dropped more than 1,500 points before recovering to close at 24,345, a 1,175-point loss. The plunge broke the Dow’s previous record for the largest daily loss by points, set on Sept. 29, 2008, when the index dropped 777 points.

President Trump was pitching the economic benefits of the GOP tax law in Cincinnati as the drop in the market intensified. The Dow fell 500 points while Trump touted rising wages and accused Democrats who refused to applaud him during the State of the Union of being “treasonous.”

All three major cable networks showed the falling stock ticker on screen during Trump’s speech, and Fox News cut into his remarks when the Dow’s drop on the day hit 1,000.

The Dow lost 4.62 percent of its value, wiping out a month of gains that featured the quickest 1,000-point jump in the index’s history.

Still, despite the headline-grabbing numbers, Monday’s drop fell far short of the the record 22 percent loss set during the 1987 stock market crash.

Even so, Monday’s losses came after the worst week for U.S stocks in two years. The Dow fell 665 points Friday and closed more than 1,000 points lower than the previous week’s record-high close at 26,616. It was the biggest single drop in a day for the Dow since June 2016.

Analysts have long warned of a potential bubble in the stock market, which means that Monday’s drop could be the beginning of a correction.

That would be bad news for the Trump administration, which has repeatedly pointed to gains in the stock market to make the case that their policies are boosting the economy.

Trump most recently touted the market gains during his State of the Union address.

“The stock market has smashed one record after another, gaining $8 trillion in value,” Trump said.

Trump told reporters late last year that “the reason our stock market is so successful is because of me.”

Treasury Secretary Steven Mnuchin, meanwhile, has said the market should be used as a scorecard for the administration’s success.

U.S. stocks experienced heavy losses across the board Monday as investors fretted over a series of expected rate hikes from the Federal Reserve. The Nasdaq fell 273 points on the day (3.78 percent) while the S&P 500 erased its January gains with a 113-point (4.1 percent) loss.

The Dow opened 183 points lower than its Friday close of 25,520, starting the week at 25,337. The Nasdaq and S&P 500 also opened with losses, down 0.8 percent and 0.7 percent, respectively.

A White House official on Monday expressed confidence in the overall strength of the economy.

“We’re always concerned when the market loses any value, but we’re also confident in the economy’s fundamentals,” the official told CNBC.

Investors are selling stocks in part because of signs of a strengthening economy, which many think will lead the Federal Reserve to raise interest rates.

The Fed raised rates three times last year and is expected to raise rates at least three times in 2018. The Fed has seen inflation lag below a 2 percent target, but the growing economy has many convinced that inflation may gather steam. Interest rate hikes would be designed to keep inflation around 2 percent.

John Williams, president of the San Francisco Federal Reserve Bank, said Friday that three or four hikes in 2018 were possible, but downplayed more aggressive rate hikes, according to Reuters.

“The expansion is proceeding at a good pace, unemployment is low, and inflation is finally headed in the right direction again,” he said after a speech in San Francisco.

Treasury bond yields have increased as the sell-off continues, reflecting investors’ concerns about the depth of a stock market correction.

Analysts are also concerned that falling energy and commodities prices reflect a global lag in demand, which could stunt several years of global economic growth.

The stock market downturn could complicate the GOP’s efforts to use a strong economy and their tax law to boost their 2018 midterm election chances.

Broader indicators of the economy remain positive, with the unemployment rate at 4.1 percent, a 17-year low. Economic growth is forecast to increase this year, and hundreds of businesses have announced plans to expand and provide bonuses to their employees since the passage of the GOP’s new tax law.

Yet the swings in the market can affect how voters feel about the economy.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said the stock downturn “reinforces that tax reform is growing this economy,” citing higher wages and impending Fed rate hikes.

“Corrections like this are normal, and certainly in this case … that’s a healthy picture,” Brady said. “We want an economy where paychecks increase.”

– Updated at 4:51 p.m. Peter Sullivan contributed.