Sinead Carew of Reuters had the news:
Former FBI chief James Comey said in a memo that Trump had asked him to end a probe into former National Security Adviser Michael Flynn’s ties with Russia, the reports said.
That was only the latest worry in a tumultuous week at the White House after Trump unexpectedly fired Comey and reportedly disclosed classified information to Russia’s foreign minister about a planned Islamic State operation.
The developments intensified doubts that Trump would be able to follow through on his promises for tax cuts, deregulation and fiscal stimulus. Those pledges had helped fuel a record-setting post-election rally on Wall Street.
Selling accelerated late in the afternoon of one of the busiest trading days in months and the three major indexes ended near session lows.
“We’ve seen the Trump agenda derailed and try to get back on track several times. It’s registering with more investors that its going to be hard to get back on track with the latest allegations,” Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Thomas Heath of The Washington Post reported that a well-watched volatility indicator also spiked:
The Dow Jones industrial average lost 368 points, or 1.8 percent to 20,611, as a broad array of other indexes all lost ground. Meanwhile, a widely followed measure of volatility known as the VIX, which had been subdued for months, spiked by a dramatic 21 percent in what was one of the most volatile days in the past decade.
While some had predicted that a surprise Trump victory would bring uncertainty to markets — and foreign markets sold off sharply as election returns came in — the stock market had kept up a steady rise since November. Many analysts cited newfound expectations that a Washington unified by Republican control would deliver an overhaul of the tax system and a large increase in spending on U.S. infrastructure — two of corporate America’s top policy goals.
The White House embraced the notion of a “Trump Rally,” and cited the gains as evidence of its immediate effect on the economy. Now, the question is whether the stock market will enter a period of new turbulence if the disarray emanating from the White House generates concern that those policy goals won’t be achieved.
“Right now, we have a Congress that is likely to be consumed with other priorities,” said Brad McMillan, chief investment officer at Commonwealth Financial Network.
One day’s stock market movements, of course, can easily be reversed the next day. But market analysts still noted the convergence of arguably Washington’s most tumultuous week in years and the market swoon.
Patti Domm of CNBC.com reported that the market could become a correction if tax reform becomes unlikely:
Both the S&P 500 and Nasdaq were at record highs this week, but then Washington became the epicenter of a new series of political shockwaves that threaten to distract the White House and Congress from President Donald Trump‘s economic agenda. On Wednesday, the S&P fell more than 1.2 percent to 2,370 in one of its strongest sell-offs since the November election. The Dow was down more than 250 points, and the Nasdaq dropped 1.8 percent.
“If the market wasn’t overvalued, I wouldn’t worry so much. An overvalued market is looking for a catalyst for a correction. This could be it,” said Jack Ablin, CIO of BMO Capital Markets. “I wouldn’t run away from the market for fear of some sort of collapse. … The U.S. market is somewhat over its skis.”
The odds for tax reform have been waning as more and more controversy swirls around the Trump White House. Initially expected this year, analysts say many investors now expect it next year. But the idea that it would not be possible at all, would be a blow for a market building in expectation of tax cuts that could boost the economy and corporate bottom lines.
Treasury yields, which move opposite prices, went lower as investors sought safety, and the dollar continued a multiday decline. Gold futures were higher, and investors piled into the SPDR Gold Trust, driving it 1.6 percent higher in a flight-to-safety trade.
Former Business Insider executive editor Rebecca Harrington has been hired by Dynamo to be its…
Bloomberg Television has hired Brenda Kerubo as a desk producer in London. She will be covering Europe's…
In a meeting at CNBC headquarters Thursday afternoon, incoming boss Mark Lazarus presented a bullish…
Ritika Gupta, the BBC's North American business correspondent, was interviewed by Global Woman magazine about…
Rest of World has hired Kinling Lo as a China reporter. Lo was previously a…
Bloomberg News saw strong unique visitor growth to its website in October, passing Fox Business…