Reuters report says Trump campaign had numerous contacts with Russia
U.S. stocks were poised Thursday to build on the previous session's hefty losses, as fresh political turmoil stoked fears that President Donald Trump's pro-growth agenda will not go ahead.
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Eroding thin gains from earlier, Dow industrial futures fell 97 points, or 0.47%, to 20,507. S&P 500 futures slid 8.5 points, or 0.36%, to 2,349. Nasdaq-100 futures lost 15.75 points, or 0.3%, to 5,563.50.
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.
"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 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. 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.
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: Retailers will be in the spotlight, with Wal-Mart Stores Inc.(WMT) due to report ahead of Wall Street's open. Analysts expect a set of steady results (http://www.marketwatch.com/story/wal-mart-earnings-results-expected-to-be-steady-in-a-sea-of-stumbling-retailers-2017-05-16) even as the broader sector has been struggling. L Brands Inc.(LB) and Ralph Lauren Corp.(RL) will also report.
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)Shares of Cisco Systems Inc.(CSCO) shares may be active after the networking giant said 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)
Thin data calendar: On Thursday, a report on weekly jobless claims is due at 8:30 a.m. Eastern Time, with a small rise to 240,000 expected. The Philly Fed index for May is set for release at the same time, with a reading on leading indicators for April following at 10 a.m. Eastern.
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.
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 89 cents, or 1.8%, to $48.18 a barrel.
(END) Dow Jones Newswires
May 18, 2017 06:36 ET (10:36 GMT)