Dow Jones falls more than 370 points as Trump controversy rattles markets

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S&P 500 falls 1.8% and Nasdaq drops 2.6% as investors fret that Trump woes could derail his pro-business agenda

Turmoil in Washington DC triggered a sell-off on Wall Street on Wednesday, with US stocks falling sharply as investors fretted that Donald Trumps latest woes could derail his pro-business agenda.

The Dow Jones industrial average fell more than 370 points (1.8%), the S&P 500 fell 1.8% and the tech-heavy Nasdaq dropped 2.6% as the value of the dollar dipped and government bond prices fell.

The falls, the sharpest since before the US election last November, ended an unusually long period of calm in the markets. Financial stocks, which had soared in the months since the election, slumped the most as bond yields declined and traders piled into utilities, gold and other traditional safe-haven assets.

Investors are questioning whether Trumps agenda can remain on track in light of the growing questions and allegations playing out in the media, said Quincy Krosby, a market strategist at Prudential Financial.

You could see gold was up, the dollar weakened and money went into the treasury markets, Krosby said. As long as it seems as if the Trump agenda can be realized before the midterm election, its OK with the market, but once you introduce uncertainty into that trajectory, thats something the market has to reassess.

The slump came after the White House was forced to deny reports on Tuesday that Trump had allegedly made a personal appeal to the now fired FBI director, James Comey, to drop the bureaus investigation into the former national security adviser Michael Flynn.

Despite the denial, the latest political drama weighed on markets, stoking concerns over how the potential fallout may affect the Trump administrations ability to pass corporate tax cuts and other business-friendly reforms.

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World’s 500 Richest People Lose $35 Billion From Trump Turmoil

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The world’s richest people lost $35 billion Wednesday when global equity markets were rocked by political turmoil in the U.S., according to the Bloomberg Billionaires Index.

Bill Gates, the world’s richest person with $86.8 billion, lost $1 billion as shares of Microsoft Corp., his largest holding, tumbled 2.8 percent, the most in almost a year. Inc. co-founder Jeff Bezos, who came within $4 billion of taking the top spot from Gates earlier this week, dropped to No. 3 after losing $1.7 billion as shares of the online retailer slid 2.2 percent. Spanish retailing tycoon Amancio Ortega lost $355 million to end the day in the second position with $83.2 billion.

Global stock indexes tumbled as political turmoil enveloped the White House, with President Donald Trump’s ties to Russia and his firing of FBI Director James Comey under scrutiny. U.S. stocks posted their steepest declines since September, led by the Nasdaq Composite’s 2.6 percent slide. The MSCI All-Country World Index fell 1.2 percent, and bank stocks were the worst performers.

Facebook Inc. founder Mark Zuckerberg was hardest hit in the tumult, dropping $2 billion when the social media giant dropped 3.3 percent. Zuckerberg is the fifth-richest person on the planet with $62.3 billion, according to the index. Trump, the first billionaire to serve as U.S. president, has a net worth of $3 billion and doesn’t have a spot on the Bloomberg index, a daily ranking of the world’s 500 richest people. They have a combined net worth of $4.9 trillion, up $455 billion in 2017.

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Dow Falls 370 Points, Bonds Rally on Trump Turmoil: Markets Wrap

The Dow Jones Industrial Average tumbled more than 370 points, Treasuries rallied the most since July and volatility spiked higher as the turmoil surrounding the Trump administration roiled financial markets around the globe.

Major U.S. stock indexes had the worst session in eight months, while the CBOE Volatility Index jumped the most since the U.K. voted to leave the European Union last June, shattering the calm that gripped markets in the past month as the crisis threatened to derail the policy agenda that helped push equities to records as recently as Monday.

The 10-year Treasury yield sank to 2.22 percent in its steepest decline since July. The spread between 10-year and two-year yields narrowed to the flattest since before Trump’s election. The dollar weakened to a level last seen in November. Emerging-market equities halted a seven-day rally. Gold futures extended a rally to six days.

“What has been setting in over the course of the day is that political uncertainty is something that’s likely going to be with us for a significant amount of time,” said Dennis Debusschere, Evercore ISI’s head of portfolio strategy and quant. “We may be looking at a higher volatility backdrop with a trending lower market for the next couple of months.” 

Wall Street finally took notice of political wrangling in Washington as investors began to question the Trump administration’s ability to focus on policy as it careens from one crisis to another. Many of the trades sparked by the president’s shock election have reversed in recent days, with the dollar all but erasing its post-election rally. The S&P 500 Index remains 10 percent higher since then, but stocks most sensitive to Trump policy prescriptions have begun to wobble.

“If he’s preoccupied defending himself and if it goes a lot further, then any hope of his legislative agenda coming to the fore is going to be reduced,” John Stopford, the London-based head of fixed-income at Investec Asset Management Ltd., said in an interview with Bloomberg TV. “Clearly at the margin it’s a negative. At the moment there’s a classic environment for yields to rally a bit further and for the dollar to sell off.”

Read our Markets Live blog here.

Here are some key events coming up:

  • OPEC’s internal Economic Commission Board meets in Vienna to discuss the market in preparation for the group’s formal meeting on May 25.
  • Data from Japan on Thursday will likely show the economy accelerated in the first three months of the year, posting a fifth straight quarter of expansion. That would be the longest consecutive period of growth since 2005-2006.

Here are the main moves in markets:


  • The S&P 500 Index fell 1.8 percent to 2,357.25 at 4 p.m. in New York, its worst day since Sept. 9. The measure touched an all-time high Tuesday.
  • The Dow average lost 372.82 points, the most in eight months, while the Nasdaq Composite Index plunged 2.6 percent for its steepest drop since June 24.
  • Bank shares led the retreat with a 3 percent slide, the most since June 24. Real-estate and utilities were the only of 11 groups in the S&P 500 to advance.
  • The Stoxx Europe 600 Index fell 1.2 percent, after ending little changed in the previous session.
  • The MSCI All-Country World Index lost 1.2 percent from a record, with banks having the biggest impact across all regions. It was the worst day in eight months.
  • MSCI’s emerging-market index retreated for the first time in eight sessions, sliding 0.6 percent.


  • The Bloomberg Dollar Spot Index dropped 0.5 percent, trading at the lowest level since Nov. 8. The yen rose 1.9 percent to 110.95 per dollar, after climbing 0.6 percent on Tuesday.
  • The euro added 0.6 percent to $1.1152, extending Tuesday’s 1 percent surge and heading for the highest since Nov. 4.


  • The yield on 10-year Treasuries dropped 11 basis points to 2.22 percent, the lowest since April 19. 
  • Odds of a June Fed rate hike settled around 60 percent, while full pricing of next hike shifted to November from September, per Fed-dated OIS rates.
  • Benchmark yields in France lost six basis points to 0.83 percent, while those in Germany declined six basis points to 0.378 percent.


  • Gold for immediate deliver climbed a sixth straight day in the longest run in a month. Spot prices added as much as 1.9 percent to a two-week high of $1,260.38 an ounce. Futures advanced a sixth straight day.
  • Crude futures added 0.8 percent to settle at $49.07 a barrel in New York. Markets are getting some encouragement from the U.S. as supplies fell for a sixth week — a sign that OPEC-led production curbs are starting to be felt in the world’s biggest oil-consuming nation.

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