MARKET SNAPSHOT: Stock Market Set To Open Lower As Trump Fears Deepen, But Data Helps

By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica Features Dow Jones Newswires

Reuters report says Trump campaign had numerous contacts with Russia

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U.S. stock-index futures pointed to a lower open on Thursday, indicating Wall Street would extend the previous session's hefty losses as fresh political turmoil stoked fears that President Donald Trump's economic agenda was in jeopardy.

Futures for the Dow Jones Industrial Average fell 75 points, or 0.4%, to 20,530. S&P 500 futures slid 6.5 points, or 0.3%, to 2,351. Nasdaq-100 futures lost 3.5 points, or 0.1%, to 5,574.75.

Equities were their lows of the session, helped in part by the latest economic data, which underscored some of the economy's more positive attributes. Initial jobless claims fell by 4,000 in the latest week, the second-lowest reading of the economic recovery (http://www.marketwatch.com/story/americans-on-unemployment-rolls-lowest-since-1988-2017-05-18), which began eight years ago. Continuing claims were at their lowest level since 1988. Separately, the Philadelphia Fed manufacturing index jumped to a reading of 38.8 in May from 22 in April (http://www.marketwatch.com/story/philly-fed-index-soars-to-388-in-may-2017-05-18).

Despite that, the tone on Wall Street was likely to be driven by the news coming out of Washington.

Losses for stock futures picked up after Reuters (http://www.reuters.com/article/us-usa-trump-russia-contacts-idUSKCN18E106) reported that former National Security Adviser Michael Flynn and others on Trump's campaign team exchanged at least 18 undisclosed phone calls or emails (http://www.marketwatch.com/story/trump-campaign-had-at-least-18-undisclosed-contacts-with-russia-report-2017-05-18) with Russian contacts during the 2016 presidential race.

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"The scandal is so dominant at the moment that I guess it doesn't take a lot to spook investors," said Connor Campbell, financial analyst at Spreadex, in emailed comments.

On Wednesday, U.S. stocks suffered a heavy selloff after the New York Times reported that U.S. President Donald Trump had asked former Federal Bureau of Investigations Director James Comey to drop an investigation between his inner circle and the Russians (http://www.marketwatch.com/story/trump-asked-comey-to-drop-flynn-investigation-report-2017-05-16).

The Nasdaq Composite Index led a disastrous session for Wall Street (http://www.marketwatch.com/story/us-stock-futures-slide-as-concerns-over-trump-grow-2017-05-17) that session, tumbling 2.6% to 6,011.24 for its worst one-day decline since last summer's Brexit vote, or Britain's vote to leave the European Union. The S&P 500 index fell 1.8% to 2,357.03, and the Dow industrials 1.8% to 20,606.93, both suffering their worst sessions since Sept. 9.

Need to know: The wheels are coming off for U.S. stocks, this classic gauge shows (http://www.marketwatch.com/story/the-wheels-are-coming-off-for-us-stocks-this-classic-gauge-shows-2017-05-18)

The reports have sparked talk of potential impeachment for Trump, though many believe the situation is far from reaching that point (http://www.marketwatch.com/story/heres-how-impeachment-works---and-why-trump-is-safe-for-now-2017-05-17). (http://www.marketwatch.com/story/heres-how-impeachment-works---and-why-trump-is-safe-for-now-2017-05-17) In one recent development, former FBI head Robert Muller has now been named as special counsel (http://www.marketwatch.com/story/robert-mueller-ex-fbi-director-named-special-counsel-for-russia-probe-2017-05-17) to investigate potential collusion between the Trump campaign and Russia.

Charalambos Pissouros, senior analyst at IronFX, said investors won't likely see much relief over the next few days, meaning appetite for riskier assets may not easily recharge.

Read:Stocks have an 86% chance of falling if weekly volatility rises (http://www.marketwatch.com/story/stocks-have-a-86-chance-of-falling-if-weekly-volatility-rises-2017-05-17)

"We base our view on the elevated market skepticism over Trump's ability to push his tax plans through Congress, as well as the fact that there is nothing major on the U.S. economic calendar to distract investors from these political developments until the release of the FOMC [Federal Open Market Committee] minutes next Wednesday," said Pissouros, in a note to clients.

Earnings in focus: Shares of Cisco Systems Inc.(CSCO) were on track to open at a three-month low after the networking giant reported its revenue decline was increasing (http://www.marketwatch.com/story/cisco-drops-5-after-forecast-shows-revenue-decline-increasing-2017-05-17). Cisco also said it would lay off another 1,100 workers (http://www.marketwatch.com/story/cisco-to-lay-off-another-1100-workers-2017-05-18).

Read:Cisco shows effects of Trump uncertainty (http://www.marketwatch.com/story/cisco-shows-effects-of-trump-uncertainty-2017-05-17)

Alibaba Group Holding Ltd.(BABA) fell 3.8% after earnings fell short of expectations.

Wal-Mart Stores Inc.(WMT) dropped moderately as earnings beat Wall Street forecasts, but revenue fell slightly short (http://www.marketwatch.com/story/wal-mart-earnings-beat-estimates-but-sales-miss-2017-05-18).

Read:Wal-Mart option traders are 'overly complacent' about earnings (http://www.marketwatch.com/story/wal-mart-option-traders-may-be-too-carefree-about-earnings-2017-05-17)

(http://www.marketwatch.com/story/wal-mart-option-traders-may-be-too-carefree-about-earnings-2017-05-17)U.S.-listed shares of Brazil stocks and exchange-traded funds were under pressure after the country's opposition lawmakers called for President Michel Temer to resign (http://www.marketwatch.com/story/brazil-etf-dives-16-premarket-after-bribery-allegation-against-president-2017-05-18) after a bribery allegation. Shares of Brazilian multinational Vale SA(VALE5.BR) tumbled 12%, while the iShares MSCI Brazil Capped ETF(EWZ) slid nearly 16%.

Cleveland Fed President Loretta Mester will speak on the economic outlook in Minneapolis, Minn. at 1:15 p.m. Eastern.

Read:Bernanke says he's always 'puzzled' by way markets ignore political risk until 'last moment' (http://www.marketwatch.com/story/bernanke-always-puzzled-by-way-markets-ignore-political-risk-until-last-moment-2017-05-17)

Overseas markets: Global stocks fell Thursday in the wake of the U.S. selloff. The Nikkei 225 index (http://www.marketwatch.com/story/wall-street-selloff-sends-asian-markets-sprawling-2017-05-17) slid 1.3% alongside a sharp rise in the Japanese yen, which has surged as investors seek out perceived haven assets.

The dollar struggled, with the British pound popping above $1.30 for the first time since September after strong retail sales.

European stocks continued to come under pressure. The Stoxx Europe 600 index extended losses, dropping 0.9%, after logging a 1.2% decline Wednesday for its biggest one-day percentage loss since Sept. 26.

Read:Global investors must remember 'all news is local,' says Mark Mobius (http://www.marketwatch.com/story/global-investors-must-remember-all-news-is-local-says-mark-mobius-2017-05-17)

Gold prices rose $3.30 to $1,262 an ounce, while oil prices extended losses (http://www.marketwatch.com/story/oil-prices-step-back-as-focus-turns-to-opec-meeting-2017-05-18), with West Texas Intermediate crude dropping 73 cents, or 1.5, to $48.34 a barrel.

(END) Dow Jones Newswires

May 18, 2017 09:07 ET (13:07 GMT)