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Stocks - Wall Street Falls as Mnuchin Haunts Markets on Christmas Eve

Investing.com - The stock market opened lower Monday as Treasury Secretary Steve Mnuchin brought out the Christmas ghosts of past (equity selloff), present (concerns about the tenure of Fed chief Jerome Powell) and future (a sudden worry about bank liquidity).

The S&P 500 fell about 0.5% and the Dow Jones lost about 0.7%. The Nasdaq Composite was down about 0.55%.

But trading could be volatile, with many investors on the sidelines for the holiday-shortened week. Volume is expected to be low as the markets close at 1:00 PM ET (18:00 GMT) today and are closed tomorrow for Christmas.

Treasury Secretary Steven Mnuchin spoke with the chief executive officers of the six largest U.S. banks, who confirmed they have enough liquidity to continue lending and that "the markets continue to function properly."

But the surprise move by Mnuchin raised worries rather than allayed them, as few in the market were concerned about liquidity in the first place.

And with no earnings reports or economic indicators for investors to trade off of, the market focused on his remarks.

Mnuchin’s actions may have been prompted by reports that President Donald Trump was considering firing Powell.

The drop in markets picked up last week after the Federal Reserve raised rates for the fourth time this year and said it would largely continue with its rate hike path and slim down its vast holdings of bonds.

Mnuchin later said Trump does not believe he has the power to remove Powell.

"It is unusual for the U.S. president to dictate the Federal Reserve and it is harmful for Trump to look into the ways of firing the chairman of the Fed. It will only shatter the market confidence further," said Naeem Aslam, chief market analyst at Think Markets UK.

Mnuchin will convene a call on Monday with the president's Working Group on financial markets, which includes Powell and the head of the Securities and Exchange Commission. The group, formed following the stock market crash of October 1987, is known more commonly as the "Plunge Protection Team" and met in 2009 in the latter stages of the financial crisis.

Looking to individual stocks, tech again looked shaky.

Among the FAANGs, Amazon (NASDAQ:AMZN) was off 2% following a report from The Wall Street Journal that it is among a number of companies being questioned about its revenue, specially its Amazon Prime revenue, by the SEC.

Netflix (NASDAQ:NFLX) slumped 0.8%, despite a report from The Guardian that it will surpass satellite broadcaster Sky in subscribers in the UK.

And Facebook (NASDAQ:FB) fell 1.4%. Wedbush took the stock off its Best Ideas list, but maintained its outperform rating.

-- Reuters contributed to this report.

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