Flight to quality pushes up gold, yen and Treasurys
Continue Reading Below
U.S. stock futures slumped on Wednesday as renewed political turmoil in Washington cast doubt on whether U.S. President Donald Trump can push forward with his pro-growth agenda.
Weakness for equities, seen in Asia (http://www.marketwatch.com/story/asian-markets-mostly-down-as-dollar-continues-to-fall-2017-05-16) and Europe (http://www.marketwatch.com/story/european-stocks-drop-as-trump-worries-rattle-markets-2017-05-17) as well, came after The New York Times reported that Trump in February asked then-Federal Bureau of Investigation Director James Comey to stop his investigation (http://www.marketwatch.com/story/trump-asked-comey-to-drop-flynn-investigation-report-2017-05-16) into former National Security Adviser Michael Flynn. The report cited a memo from Comey.
The report also prompted some House Republicans to call for a further investigation and for the FBI to hand over documents related to communications between Comey and the president.
See:Sen. McCain says Trump's problems are 'reaching Watergate size' (http://www.marketwatch.com/story/mccain-says-trumps-problems-reaching-watergate-size-2017-05-17)
The main indexes were set to retreat from recent record levels. S&P 500 futures dropped 14 points, or 0.6%, to 2,382. Nasdaq-100 futures lost 32 points, or 0.6%, to 5,692. Dow Jones Industrial Average futures were down 118 points, or 0.6%, at 20,817.
Continue Reading Below
Perceived haven assets rose, with gold up $12.60, or 1% (http://www.marketwatch.com/story/gold-rises-and-tries-for-fresh-2-week-high-as-trump-worries-spark-haven-demand-2017-05-17), to $1,249 an ounce. Demand for U.S. government bonds pushed the yield on the 10-year Treasurys to 2.28%, a three-week low. The Japanese yen , another asset investors turn to in time of trouble, rose against the dollar, with the greenback buying Yen112.14, compared to Yen113.12 late Tuesday.
The dollar also slumped against other major rivals (http://www.marketwatch.com/story/asian-markets-mostly-down-as-dollar-continues-to-fall-2017-05-16), with the ICE Dollar Index falling to its lowest level since the day after the U.S. presidential election in November. It hit an intraday low of 97.86.
"Given that the 'Trump trade' is one of the main reasons the market has been able to break records of late, it is understandable that the scandal engulfing the U.S. government would be of some concern to investors," said Connor Campbell, financial analyst at Spreadex, in a note.
"That's because this crisis will likely prevent Trump from pushing through the very policies -- like his huge infrastructure plans and generous tax cuts -- that fuelled much of the recent rally any time soon, undermining the basis for the current highs," he added.
The New York Times report comes just a day after the first reports emerged that Trump had shared classified intelligence (http://www.marketwatch.com/story/trump-revealed-sensitive-intel-to-russians-us-officials-say-2017-05-15) with top Russian officials at a meeting last week. Also last week, Trump fired Comey in a move tied to the former FBI director's investigation into Russian connections in the president's circle.
The probability of a Trump impeachment has gone up after the recent events, analysts noted, with bookmaker Paddy Power's odds reflecting a 33% chance it could happen. An impeachment requires the backing of two-thirds of the Republican-controlled Senate.
Read:Trump impeachment? Bookies odds increasingly point to an early exit (http://www.marketwatch.com/story/trump-impeachment-odds-increasingly-point-to-an-early-exit-2017-05-17)
Also read:Here's why stocks could rally if Trump heads for the exit (http://www.marketwatch.com/story/heres-why-stocks-could-rally-if-trump-heads-for-the-exit-2017-05-12)
(http://www.marketwatch.com/story/heres-why-stocks-could-rally-if-trump-heads-for-the-exit-2017-05-12) (http://www.marketwatch.com/story/heres-why-stocks-could-rally-if-trump-heads-for-the-exit-2017-05-12)The ongoing political uncertainty sent the Dow average and the S&P 500 slightly lower in Tuesday's trade (http://www.marketwatch.com/story/us-stocks-poised-to-cool-their-heels-at-record-highs-2017-05-16). The Nasdaq Composite Index closed at a record for a second session in a row.
However, even with the recent weakness in U.S. stocks, Kully Samra, Charles Schwab's U.K. managing director, said investors shouldn't sweat the political jitters too much.
"It's kind of a sweet spot for stocks at the moment. Economic growth is good, but not overheated, corporate profits are strong, inflation is tame, and politics is the one outlier," he said.
Earnings news: Retailer Target Corp.(TGT) surged 6.8% in premarket trade after posting adjusted earnings that easily outstripped Wall Street's expectations (http://www.marketwatch.com/story/target-shares-climb-6-premarket-after-results-exceed-expectations-2017-05-17).
After the market closes, Cisco Systems Inc.(CSCO) earnings are on deck. Cisco shares have risen 2.5% so far this week, rising alongside other cybersecurity and antivirus shares after the "WannaCry" ransomware attack that hit more than 200,000 computers worldwide.
Read:4 tips to protect yourself from becoming a ransomware victim (http://www.marketwatch.com/story/4-tips-to-protect-yourself-from-becoming-a-ransomware-victim-2017-05-14)
Stock movers: Shares of Advanced Micro Devices Inc. (AMD) slumped 7% after the chip maker late Tuesday laid out its new growth plans (http://www.marketwatch.com/story/amd-gains-after-laying-out-plans-for-growth-in-servers-2017-05-16).
Red Robin Gourmet Burgers Inc.(RRGB) soared 18% premarket after the restaurant chain late Tuesday reported better-than-expected (http://www.marketwatch.com/story/red-robin-shares-up-15-after-company-beats-earnings-sales-expectations-2017-05-16) first-quarter earnings and sales.
Oil blues:Oil prices swung between gains and losses (http://www.marketwatch.com/story/oil-prices-under-pressure-amid-fresh-concerns-about-us-supply-2017-05-17), after the American Petroleum Institute late Tuesday reported a climb of 882,000 barrels in U.S. crude supplies for the week ended May 12. Official supply data from the Energy Information Administration will be released Wednesday morning.
Crude oil rose 0.4% to $48.81 a barrel, after trading as low as $48.03 earlier in the day.
Read:Why Iran poses most 'underappreciated' upside to oil prices (http://www.marketwatch.com/story/why-iran-poses-most-underappreciated-upside-to-oil-prices-2017-05-16)
(END) Dow Jones Newswires
May 17, 2017 08:49 ET (12:49 GMT)