Wall Street selloff worsens on Mnuchin move, D.C. drama

Dec 24 (Reuters) - A steep sell-off in U.S. stocks worsened in a pre-holiday shortened session on Monday, as a move by the U.S. Treasury secretary to convene a crisis group and other political developments rattled investors and pushed the S&P 500 to the brink of a bear market.

All three major indexes ended down more than 2 percent on the day before the Christmas holiday. The S&P 500 ended down about 19.8 percent from its Sept. 20 closing high, just shy of the 20 percent threshold commonly used to define a bear market.

Treasury Secretary Steven Mnuchin called top U.S. bankers on Sunday amid the pullback in stocks. Investors also were grappling with a federal government shutdown and reports that Trump privately discussed the possibility of firing the Federal Reserve chairman.

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Scenes from Wall Street's worst week in a decade
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Scenes from Wall Street's worst week in a decade
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 21: Traders work on the floor of the New York Stock Exchange (NYSE) on December 21, 2018 in New York City. Following another down day and one of the worst trading months in recent history, investors are nervously looking for positive economic and political news to gain back some of the loses. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - DECEMBER 20: Traders and financial professionals work ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, Dec. 20, 2018 -- A trader works at the New York Stock Exchange in New York, the United States, Dec. 20, 2018. U.S. stocks closed lower on Thursday as investors digested the central bank's latest rate hike decision. The Dow Jones Industrial Average was down 464.06 points, or 1.99 percent, to 22,859.60. The S&P 500 fell 39.54 points, or 1.58 percent, to 2,467.42. The Nasdaq Composite Index fell 108.42 points, or 1.63 percent, to 6,528.41. (Xinhua/Wang Ying) (Xinhua/Wang Ying via Getty Images)
NEW YORK, NY - DECEMBER 20: Traders and financial professionals work ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: President Donald Trump is displayed on a screen on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: President Donald Trump is displayed on a monitor as a trader works at his desk ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: A monitor displays the days' final numbers on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: President Donald Trump is displayed on a monitor as a trader works at his desk ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: Traders and financial professionals work ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: Traders and financial professionals work ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: A trader works at his desk ahead of the closing bell on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
NEW YORK, NY - DECEMBER 20: A monitor displays the days' final numbers on the floor to he New York Stock Exchange (NYSE), December 20, 2018 in New York City. The Dow Jones industrial average continued its tumultuous week, closing down over 460 points on Thursday, one day after the Federal Reserve raised the interest rate. (Photo by Drew Angerer/Getty Images)
Traders with Livermore Securities at the New York Stock Exchange follow the news from the Federal Reserve Board of a rate increase, Wednesday, Dec. 19, 2018. (AP Photo/Mark Lennihan)
Traders at the New York Stock Exchange listen as Federal Reserve Chair Jerome Powell is seen on a video screen giving a news conference from Washington after the Fed announced a rate increase, Wednesday, Dec. 19, 2018. (AP Photo/Mark Lennihan)
Stock traders work at the New York Stock Exchange, Wednesday, Dec. 19, 2018. (AP Photo/Mark Lennihan)
A monitor displays stock market information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
A television broadcasts Jerome Powell, chairman of the U.S. Federal Reserve, announcing an increase in the Federal Reserve interest rate as a trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
The closing numbers are displayed after the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on December 19, 2018 in New York. - Wll Street stocks tumbled Wednesday, December 19, 2018 after the Federal Reserve lifted interest rates while pledging a cautious approach to additional interest rate hikes next year. At the closing bell, the Dow Jones Industrial Average was down 1.5 percent, about 350 points, at 23,324.10. The broad-based S&P dropped 1.5 percent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 percent to 6,635.48. Major indices had been up about one percent prior to the Fed announcement. (Photo by Bryan R. Smith / AFP) (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
NEW YORK, NEW YORK - DECEMBER 19: Traders work on the floor of the New York Stock Exchange (NYSE) after the Federal Reserve Board Chairman Jerome Powell held a news conference on December 19, 2018 in New York City. U.S. stocks fell on Wednesday after the Federal Reserve raised interest rates for the fourth time in 2018. (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 19: Traders work on the floor of the New York Stock Exchange (NYSE) after the Federal Reserve Board Chairman Jerome Powell held a news conference on December 19, 2018 in New York City. U.S. stocks fell on Wednesday after the Federal Reserve raised interest rates for the fourth time in 2018. (Photo by Spencer Platt/Getty Images)
A television broadcasts Jerome Powell, chairman of the U.S. Federal Reserve, announcing an increase in the Federal Reserve interest rate on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
A monitor displays stock market information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
A monitor displays an S&P 500 chart on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
Traders watch a television broadcasting Jerome Powell, chairman of the U.S. Federal Reserve, announcing an increase in the Federal Reserve interest rate on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Dec. 19, 2018. U.S. stocks careened to a 15-month low after Jerome Powell failed to quell investor angst that the Federal Reserve's tightening policy will throttle economic growth. Photographer: Michael Nagle/Bloomberg via Getty Images
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“The headlines we are seeing today, yesterday, over the weekend are not great,” said Vinay Pande, global head of trading strategies at UBS Global Wealth Management.

“The market is concerned about what is happening in D.C. In the face of a large correction in the market, there seems to be disarray and disunity, and people aren’t speaking with one voice, which I think is discouraging to anybody in the market.”

The Dow Jones Industrial Average fell 653.17 points, or 2.91 percent, to 21,792.2, the S&P 500 lost 65.52 points, or 2.71 percent, to 2,351.1 and the Nasdaq Composite dropped 140.08 points, or 2.21 percent, to 6,192.92.

Last week, the S&P 500 suffered its biggest weekly percentage drop since August 2011, while the Dow had its biggest weekly drop since October 2008.

All 11 S&P 500 sectors ended in negative territory on Monday, meaning they were all in negative territory for the year.

Roughly three-fourths of the S&P 500 was trading in bear market territory.

All 30 components of the Dow industrials also finished in the red on Monday.

For the third straight day, more than 2,600 New York Stock Exchange- and Nasdaq-listed stocks were hitting 52-week lows, reflecting a depth of selling the market had not experienced since the height of the financial crisis a decade ago.

Mnuchin spoke on Sunday with the heads 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 investors said his move to convene a call on Monday with the President's Working Group on Financial Markets, commonly as the "Plunge Protection team," may have weighed on investors on Monday. "When the Dow is down 600 points, it's hard to say it was a positive," said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

"Although his intention was a very good one, the net feeling I think was, 'Is there a bigger problem that we don't know about?" he said. Aside from Mnuchin's move, Trump's budget director and chief of staff, Mick Mulvaney, on Sunday said a partial U.S. government shutdown could continue to Jan. 3, when the new Congress convenes and Democrats take over the House of Representatives.

The stock market closed at 1 p.m. EST (1800 GMT) ahead of Tuesday's Christmas holiday.

Give the extremely restricted liquidity at this time of year, Pande said, "any selling here will beget a very large decline.”

About 5.9 billion shares changed hands in U.S. exchanges, compared with the 8.9 billion-share daily average over the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 3.56-to-1 ratio; on Nasdaq, a 2.68-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 242 new lows; the Nasdaq Composite recorded five new highs and 837 new lows.

(Additional reporting Saqib Iqbal Ahmed in New York and Medha Singh in Bengaluru; Editing by Sriraj Kalluvila and Jonathan Oatis)

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