(CN) - The Dow Jones industrial average fell by more than 1,100 points in afternoon trading Monday, amid concerns that the much ballyhooed Republican tax cut could overheat the economy and dramatically accelerate federal borrowing.
At one point, the Dow dropped more than 1,500 points Monday before recovering to close at 24,341, a 1,179-point loss.
The collapse 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 has repeatedly pointed to the robust stock market as a sign that his pro-business economic policies are working, but a number of factors now appear to be making investors jittery, driving a sell-off that began with a 666-point plunge on Friday.
The selloff was sparked by inflation fears and worries that interest rates could rise faster than expected. Those fears stem from a strong employment report the Labor Department released Friday that showed wage growth for hourly workers over the past year had risen nearly 3 percent -- its fastest pace in nine years.
Compounding these concerns is uncertainty about a new and untested Federal Reserve chairman, Jerome Powell, who was sworn in Monday as the 16th chairman of the Federal Reserve in a brief ceremony in the Fed's board room.
Powell succeeds Janet Yellen, the first woman to lead the nation's central bank in its 100-year history. President Donald Trump picked Powell after deciding to break with recent tradition and not offer Yellen a second four-year term.
In a video message, Powell said, "Today, unemployment is low, the economy is growing and inflation is low."
"I am also pleased to report that our financial system is now far stronger and more resilient than it was before the financial crisis that began about a decade ago. We intend to keep it that way," he said.
But Powell's soothing words did little to stem the volatility of the market Monday.
On top of concerns about rising inflation, the tax cuts are already increasing the federal government’s need to borrow and accelerating the date by which Congress must raise the federal debt limit. As of Monday, there was still no plan in Washington to raise the limit and avoid a catastrophic default.
Banks were taking some of the biggest losses, with Wells Fargo getting especially hard hit after the Federal Reserve hit the bank with new sanctions over a scandal that involved opening millions of phony consumer accounts.
As of about 2:30 p.m., other markets were joining the Dow Jones industrial average in a downward spiral. The Standard & Poor's 500 index was down 2 points, or 5 percent from its latest record high, set January 26; the Nasdaq composite had fallen 101 points, or 1.4 percent, to 7,140; and the Russell 2000 index of smaller-company stocks was down 25 points, or 1 percent, to 1,522.
The decline over the last few days isn't large by historic standards, but stocks haven't suffered a 5 percent drop since the two days after Britain voted to leave the European Union in June 2016. They recovered those losses within days.
The market hasn't gone through a 10 percent drop since early 2016, when oil prices were plunging as investors worried about a drop in global growth, which could have sharply reduced demand. U.S. crude hit a low of about $26 a barrel in February of that year.
In other markets, gold declined 80 cents to $1,336.50 an ounce. Silver dipped 4 cents to $16.67 an ounce. Copper rose 3 cents to $3.22 a pound.
As for Bitcoin, its prices and future continued to sink Monday.
According to Coindesk, the price of bitcoin fell 15 percent to $6,957. It reached a high of almost $20,000 in December, and traded under $1,000 in early 2017. Many financial pros warn that bitcoin is in a speculative bubble that could burst anytime. On the CME, bitcoin futures plunged 19 percent to $6,975. They tumbled 18 percent to $6,950 on the Cboe.
The Associated Press contributed to this report.
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