With the Dow and S&P 500 plunging by almost 8% on Monday, the market dropped by its steepest rate since the Great Recession. It's also the worst December on record since 1931, in the midst of the Great Depression, when losses reached as much as 14%.

The losses were primarily driven by fears over the Fed's rate hike. It's not the Fed's rake hike that set the markets off per se, but rather Powell's announcement that the Fed will continue to trim its balance sheet. This has triggered concerns regarding the impending inverted yield curve and a slower economy. The Fed plans to run $50 billion off its balance sheet, leading to a tighter monetary position than expected.

Concerns over a potential government shutdown (which has since become a reality) also drove markets lower, with Trump tweeting: "The Democrats, whose votes we need in the Senate, will probably vote against Border Security and the Wall even though they know it is DESPERATELY NEEDED. If the Dems vote no, there will be a shutdown that will last for a very long time. People don't want Open Borders and Crime!"

Anxieties over low-performing tech stocks as well as debates over privacy, tax evasion, and corporate responsibility, particularly involving Facebook (FB  ), have also put a damper on investor sentiment.

"There's a fear of weaker economic growth virtually everywhere, as the world emerges from quantitative easing and confronts tighter monetary policy," says Greg Valliere of Horizon Investments. "That, in a nutshell, is the greatest concern."

However, investors are expecting the losses to be ameliorated by "window-dressing," in which money managers buy an array of high-value stocks to endow their portfolios with some short-term appeal.

"The message people should take home, especially if there's a government shutdown, is that longer term, the prospects for equities are not good," said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. "There are lots of signs now suggesting that we may be looking at a recession. I would say that the risk here is that a whole lot of confluence is taking place: The trade was is not going to end soon, and the Fed totally misjudged the market in suggesting two more rate hikes next year."

What's more concerning is that the banking giants, including Goldman Sachs (GS  ) and Citigroup (C  ), which have conventionally been the rocks of Wall Street, have also fallen precipitously. It remains to be seen whether less volatile stocks will be able to weather the storm, but investors should remain wary when it comes to tech and commodities.