Wed | Dec 8, 2021

Washington turmoil rattles markets

Published:Wednesday | May 17, 2017 | 12:00 AM

United States stocks fell sharply in late-afternoon trading Wednesday as investors fretted that the latest turmoil in Washington could hinder President Donald Trump's pro-business agenda.

The steep drop, which sent the Dow Jones Industrial Average down more than 300 points, ended an unusually long period of calm in the markets. Financial stocks, which had soared in the months since the election, slumped the most as bond yields declined and traders piled into utilities, gold and other traditional safe-haven assets.

The Standard & Poor's 500 index fell 36 points, or 1.5 per cent, to 2,364 as of 3:04 p.m. Eastern Time. The Dow Jones Industrial Average slid 317 points, or 1.5 per cent, to 20,662. The Nasdaq composite index gave up 135 points, or 2.2 per cent, to 6,034, a day after closing at its latest record high.

Investors are questioning whether or not President Donald Trump's agenda can remain on track in light of the growing questions and allegations playing out in the media, said Quincy Krosby, market strategist at Prudential Financial.

"You could see gold was up, the dollar weakened and money went into the Treasury markets," Krosby said. "As long as it seems as if the Trump agenda can be realised before the midterm election, it's okay with the market, but once you introduce uncertainty into that trajectory, that's something the market has to reassess."


A published report late Tuesday revealed that Trump allegedly made a personal appeal to now-fired FBI Director James Comey to drop the bureau's investigation into former National Security Adviser Michael Flynn.

The White House denied the report. Even so, the latest political drama unfolding in Washington weighed on markets, stoking concerns over how the potential fallout may affect the Trump administration's ability to pass corporate tax cuts and other business-friendly reforms.

The market is coming off an unusually long period of calm after hitting a series of record highs. On Tuesday the S&P 500, the benchmark favoured by professional investors, marked its 15th straight day of moving up or down by less than 0.5 per cent. It closed at its latest record high on Monday.

Bond prices rose Wednesday. The 10-year Treasury yield fell to 2.21 per cent from 2.33 per cent late Tuesday.

Unease over the potential implications of the latest political fallout in Washington also weighed on the dollar Wednesday. The euro strengthened to US$1.1150 from US$1.1095. Against the yen, the dollar was down to •111.12 from •113.03.


Benchmark US crude rose 41 cents, or 0.8 per cent, to close at $49.07 per barrel in New York. Brent crude, used to price international oils, gained 56 cents, or 1.1 per cent, to close at US$52.21 per barrel in London. In other futures trading, natural gas fell four cents to US$3.19 per 1,000 cubic feet.

Wholesale gasolene was little changed at $1.60 per gallon. Heating oil rose two cents to $1.53 per gallon.

The price of gold jumped 1.8 per cent, climbing US$22.30 to settle at US$1,258.70 per ounce. Silver added 16 cents to US$16.85 per ounce. Copper was little changed at US$2.54 per pound.

In Europe, Germany's DAX fell 1.4 per cent. The CAC 40 in France slid 1.6 per cent. The FTSE 100 index of leading British shares dipped 0.2 per cent. Asian markets mostly fell. Japan's Nikkei 225 dropped 0.5 per cent, while South Korea's Kospi dipped 0.1 per cent. Hong Kong's Hang Seng index slipped 0.2 per cent.

- AP