MARKET SNAPSHOT: U.S. Stocks Skid Sharply Lower As Trump Worries Slam Wall Street

By Sue Chang and Sara Sjolin, MarketWatch Features Dow Jones Newswires

Flight to quality pushes up gold, yen and Treasurys

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U.S. stocks sold off Wednesday as renewed political turmoil in Washington cast doubt on whether President Donald Trump can push forward with a pro-growth agenda that had helped drive stocks to repeat records.

The continuing political uncertainty sent the S&P 500 index down 27 points, or 1.1%, to 2,373, with nine of its 11 main sectors trading lower. Financials, which had been among the biggest beneficiaries of Trump's market-friendly agenda, were the biggest losers, down more than 2%.

The Dow Jones Industrial Average dropped more than 250 points, or 1.2%, to 20,724. Of the 30 blue-chip companies, 26 were trading lower. Goldman Sachs Group Inc.(GS) and J.P. Morgan Chase & Co(JPM), were leading the losses.

The Nasdaq Composite Index , which closed at a record for a second session in a row on Tuesday, declined 100 points, or 1.6%, to 6,067.

"Today's market action is a quintessential risk-off day, with investors getting out of risky assets such as equities and piling into Treasurys and gold," said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

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"The big selloff in banking stocks suggests that the market now believes that no tax or regulatory reforms are coming," Antonelli said.

Read:How to tell if the tide has finally turned on this Trump rally (http://www.marketwatch.com/story/how-to-tell-if-the-tide-has-finally-turned-on-this-trump-rally-2017-05-17)

Weakness for global equities came after the New York Times reported that Trump in February asked then- director of the Federal Bureau of Investigation, 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 also prompted some House Republicans to call for a further investigation and for the FBI to hand over documents related to communications between the president and Comey, whom Trump fired earlier this month.

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 CBOE Volatility Index , which measures implied volatility on the S&P 500, spiked 23% to 13.11, on pace for its biggest daily climb since November.

Perceived safe haven assets rose, with gold up 1.6% (http://www.marketwatch.com/story/gold-rises-and-tries-for-fresh-2-week-high-as-trump-worries-spark-haven-demand-2017-05-17) to $1,256.10 an ounce. Demand for U.S. government bonds pushed the yield on the 10-year Treasury note to 2.24% (http://www.marketwatch.com/story/treasury-yields-sink-as-trump-fbi-controversy-intensifies-2017-05-17).

"This isn't about who is right or wrong; it is about a concern that a number of things could derail the future of economic growth that were not present a month ago. Whether it is oil prices, slowing inflationary growth, or a fear of 'nothing done' in Washington, investors are beginning to make some portfolio adjustments," Kevin Giddis, head of fixed-income capital markets, said in a research note.

Giddis expects investors to selloff in stocks to move to bonds for now although the shift isn't likely to be significant unless there is further destabilizing news out of the nation's capital.

The Japanese yen , another asset investors typically turn to in time of stress, rose against the dollar, with the greenback buying Yen111.45, compared with 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 before the U.S. presidential election in November. It hit an intraday low of 97.55.

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)Stock movers: Retailer Target Corp.(TGT) rose 2.2% 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 world-wide.

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)

Shares of Advanced Micro Devices Inc.(AMD) slumped more than 9% 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 16% 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 (http://www.marketwatch.com/story/oil-prices-under-pressure-amid-fresh-concerns-about-us-supply-2017-05-17) rose 1.2% to $49.26 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)

--Barbara Kollmeyer contributed to this article.

(END) Dow Jones Newswires

May 17, 2017 12:16 ET (16:16 GMT)