MARKET SNAPSHOT: Nasdaq Suffers Biggest Daily Drop Since June 24, Fear Gauge Soars On Trump Worries

Wall Street's fear index spikes the most since Brexit

The Nasdaq on Wednesday saw its worst one-day decline since the day after U.K.'s vote to exit from the European Union rattled markets, as turmoil in Washington cast doubt on President Donald Trump's pro-growth agenda that had helped to drive stocks to records.

Tuesday's selloff in the technology-laden benchmark, which has represented enthusiasm for assets perceived as risky, highlighted a broad market unraveling across much of the globe.

The S&P 500 index and the Dow Jones Industrial Average had their worst sessions since Sept. 9.

Political uncertainty sent the S&P 500 index down 43.64 points, or 1.8%, to 2,357.03. Financials, which had been among the biggest beneficiaries of Trump's market-friendly agenda, were the biggest losers, down more than 3%.

The Dow sank 372.82 points, or 1.8%, to finish at 20,606.93. Goldman Sachs Group Inc.(GS) tanked 5.3% and J.P. Morgan Chase & Co.(JPM) skidded 3.8%.

The Nasdaq Composite Index , which closed at a record for a second session in a row on Tuesday, coughed up 158.63 points, or 2.6%, to end at 6,011.24.

Small-capitalization stocks also suffered withering losses, with the Russell 2000 index falling 2.8% to 1,355.89.

Wall Street witnessed a "typical" flight to safety spurred on by fear, said Ian Winer, head of equities at Wedbush Securities. "On a fundamental level investors are constantly assessing the likelihood of tax reform and regulatory reform into the multiple they put on the market. Whenever more questions arise on timing of these policies, the market tends to sell off because we add risk," he said.

Also read: Bernanke: Always 'puzzled' by way markets ignore political risk until 'last moment' (

The CBOE Volatility Index , which measures implied volatility on the S&P 500 30 days in the future, spiked 46% to 15.59, its biggest daily climb since after Brexit, or Britain's vote to exit from the EU, in June.

"Investors are more nervous today than they were yesterday so you are seeing a big bid in the bond market. So funds are reducing equities slightly today and moving into safety," Winer said.

Uneasiness 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 ( 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' (

"The big selloff in banking stocks suggests that the market now believes that no tax or regulatory reforms are coming," said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

Read:How to tell if the tide has finally turned on this Trump rally (

Perceived haven assets rose, with gold settling 1.8% higher ( at $1,258.70 an ounce. Demand for U.S. government bonds pushed the yield on the 10-year Treasury note to 2.22%, its lowest yield in about three weeks (

"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 sell stocks and 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 times of stress, rose against the dollar, with the greenback buying Yen111.01, compared with Yen113.12 late Tuesday.

The dollar also slumped against other major rivals ( The ICE Dollar Index which earlier fell to its lowest level since before the U.S. presidential election in November regained some ground to trade at 97.51. 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 (

Also read:Here's why stocks could rally if Trump heads for the exit (

( ( movers: Retailer Target Corp.(TGT) rose 0.9% after posting adjusted earnings that easily outstripped Wall Street's expectations (

Shares of Advanced Micro Devices Inc.(AMD) slumped more than 12% after the chip maker late Tuesday laid out its new growth plans (

Red Robin Gourmet Burgers Inc.(RRGB) soared 23% after the restaurant chain late Tuesday reported better-than-expected ( first-quarter earnings and sales.

Oil blues:Oil prices ( rose 0.8% to settle at $49.07 a barrel, after trading as low as $48.03 earlier in the day.

Read:Why Iran poses most 'underappreciated' upside to oil prices (

--Barbara Kollmeyer contributed to this article.

(END) Dow Jones Newswires

May 17, 2017 16:42 ET (20:42 GMT)