FINANCIAL MARKETS
The brewing political crisis in Washington rattled Wall Street Wednesday, knocking the Dow Jones industrial average down more than 370 points and giving the stock market its biggest single-day slump in eight months.
Investors worried that President Donald Trump’s pro-business agenda could be hindered by fallout from allegations that he asked the FBI to end an investigation into former National Security Adviser Michael Flynn.
The steep drop ended an unusually long period of calm for the markets, which had been hovering near all-time highs.
Financial stocks, which had soared in the months since the election, declined the most as bond yields fell sharply. Bonds, utilities and gold rose as traders shunned riskier assets. The dollar fell.
The Standard & Poor’s 500 index had its biggest drop since September, sliding 43.64 points, or 1.8 percent, to 2,357.03. The Dow lost 372.82 points, or 1.8 percent, to 20,606.93. The Nasdaq composite index, coming off setting two consecutive record highs, gave up 158.63 points, or 2.6 percent, to 6,011.24.
The sell-off snapped an unusually long period of calm after hitting a series of record highs. On Tuesday the S&P 500, the benchmark favored by professional investors, marked its 15th straight day of moving up or down by less than 0.5 percent. It closed at its latest record high on Monday. The seeds of Wednesday’s steep market sell-off were present late Tuesday, when a published report revealed that Trump asked the now-fired FBI Director James Comey to drop the bureau’s investigation into Flynn. The White House denied the report.
After trading closed for the day, the Justice Department appointed former FBI Director Robert Mueller as a special counsel to oversee an investigation into allegations Russia and Trump’s campaign collaborated to influence the election last year.
Trump had already been facing pointed questions about his discussions with Russian diplomats during which he was reported to have disclosed classified information.
The latest headlines ratcheted up the market’s unease. The VIX index, a measure of how much volatility investors expect in stocks, rose to its highest level since April 13. Investors shifted into U.S. government bonds, pushing yields lower, and into gold. The precious metal jumped 1.8 percent, climbing $22.30 to settle at $1,258.70 per ounce.
Benchmark U.S. crude rose 41 cents, or 0.8 percent, to close at $49.07 per barrel in New York. Brent crude, used to price international oils, gained 56 cents, or 1.1 percent, to close at $52.21 per barrel in London. In other futures trading, natural gas fell 4 cents to $3.19 per 1,000 cubic feet. Wholesale gasoline was little changed at $1.60 per gallon. Heating oil rose 2 cents to $1.53 per gallon.