The Dow Industrial Average had a miserable Christmas Eve. | Bryan R. Smith/AFP/Getty Images FINANCE & TAX Markets drop sharply as Trump digs in on Fed attacks

The Trump administration begged markets for a Christmas gift, but a bear came crashing down the chimney.

The Dow Jones Industrial Average and other stock market indices stuck an ominous landing Monday despite — and perhaps because of — Treasury Secretary Steven Mnuchin’s attempts to soothe spooked markets. And President Donald Trump showed no sign of relenting in his attacks on the Federal Reserve that have so rattled investors.


The Dow closed down 653 points, or 2.9 percent, at 1 p.m., the end of a holiday-shortened session. It was its worst Christmas Eve ever. The S&P 500 dropped into a bear market.

The president, a stock-obsessed businessman, again made clear where he lays the blame.

“The only problem our economy has is the Fed,” he tweeted . “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!”

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Top Democrats fired back.

“It’s Christmas Eve and President Trump is plunging the country into chaos,” House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) said in a joint statement. “The stock market is tanking and the president is waging a personal war on the Federal Reserve — after he just fired the Secretary of Defense.”

Rep. Maxine Waters (D-Calif.), who’s in line to be the next head of the House Financial Services Committee chair, blamed the decline on uncertainty caused by Trump and Mnuchin. “It would be in our nation’s best interest if they stopped what they are doing,” she said in a statement.

The threat that Trump might fire Federal Reserve Chairman Jerome Powell, whose role’s independence from political whims is fundamental to the banking system, has already scared investors.

Trump has trained his ire on Powell over the falling stock markets. The New York Times reported Sunday that he has asked aides about firing the chairman.

Most experts reject Trump’s characterization of the tumult on Wall Street, which just had its worst week in a decade — since the 2008 financial crisis. The Fed’s steady raising of interest rates has played a role in sliding stock markets. But so, too, have Trump’s trade wars and a partial government shutdown that he initially declared himself proud to own.

The latest jolt arrived Sunday, when Mnuchin announced that he had talked with the heads of the country’s six biggest banks to ensure they all had sufficient cash on hand.

The Treasury secretary was trying to reassure. And he also sought to tamp down speculation about Powell’s firing. But by Monday morning, it was clear his statement may have backfired.

Two executives familiar with Mnuchin’s calls to bank CEOs told POLITICO that the calls themselves were fine — but that Mnuchin erred with the follow-up statement.

“He was doing what he should do and what he does do, which is be in regular contact with CEOs, find out what they are seeing, what they are worried about,” said one executive. “But in this case he made a mistake and made it look like markets needed reassurance when they don’t need reassurance.

“He didn’t need to put out that statement at all, it looked panicky.”

Raising the specter of a liquidity crisis that few had been thinking about — even if just to shoot it down — unsettled markets and prompted plenty of head-scratching among economists.

“Through the looking glass,” Diane Swonk, chief economist at Grant Thornton, tweeted Sunday. “Hoping markets read this as strange instead of terrifying. I am completely baffled.”

But by the close of trading Monday, it was clear that Trump’s anti-Fed tweet had done more than anything else to shake markets.

“It’s frustrating because there is enough going on in the world without him bashing the Fed,” the second executive said.

Trump and his campaign team are concerned that a potential economic downturn would endanger his reelection prospects.