Ouch! That is the single best word I can use here to describe today’s trading activity on Wall Street. The S&P 500 and the Dow chalked up their largest one-day fall since September 9, as hopes for tax cuts and other pro-business policies faded in the wake of reports that President Trump tried to interfere with a federal investigation.

Former FBI chief James Comey said in a memo that Trump had asked him to end a probe into former National Security Adviser Michael Flynn’s ties with Russia, the reports said.

That was only the latest worry in a tumultuous week at the White House after Trump unexpectedly fired Comey and reportedly disclosed classified information to Russia’s foreign minister about a planned Islamic State operation.

The developments intensified doubts that Trump would be able to follow through on his promises for tax cuts, deregulation and fiscal stimulus. Those pledges had helped fuel a record-setting post-election rally on Wall Street.

Selling accelerated late in the afternoon of one of the busiest trading days in months and the three major indexes ended near session lows.

Both the Dow and S&P 500 fell below their 50-day moving average for first time since late April. The S&P began the session 0.74 percent lower, the largest gap down since March 30, 2009, when it opened trading with a 0.84 percent drop. The VIX, Wall Street’s so called fear gauge, topped 15.34, its highest level since April 18.

Nasdaq saw its steepest one-day loss since June 24, after Britain voted to exit the European Union, as did the S&P’s financial and technology sector indexes. The financial sector fell 3 percent while the technology sector fell 2.8 percent.

The S&P bank sub-sector was down 4 percent, led by a 5.9 percent decline in Bank of America and a 3.8 percent loss for JPMorgan.

Approximately 8.37 billion shares changed hands on the major domestic equity exchanges in the busiest trading day since March 21, as compared to the 6.9 billion-share average for the last 20 sessions.

Trump Trade More Like Trepidation Trading

Investors are beginning to lose confidence that tax reform and strategies premised on President Trump’s economic growth promises will come about as the President faces his loudest criticism yet over possible collusion between his election campaign and Russia.

From stocks to bonds to the dollar, trades that have been fashionable since Trump’s election last November, becoming unwound, or in some cases shredded, as his reform agenda looked increasingly vulnerable amid the fallout from his firing last week of James Comey, the director of the Federal Bureau of Investigation.

The uncertainty about Trump’s future increased in the last 24 hours over allegations Trump had sought to end Comey’s investigation into ties between the president’s first national security adviser, Michael Flynn, and Russia, and even some Republicans were now calling for a deeper probe into possible obstruction of justice.

The result was the harshest sell off yet in equity markets since Trump was elected and a jettisoning of positions that were tied to the notion that his policies would stoke economic growth and inflation.

Indeed, some “Trump trades” have been unwinding for weeks, especially in the bond and currency markets where bets on inflation risks and economic growth prospects are most prevalent.

On Wednesday, one key indicator of the level of inflation five years from now fell to its lowest since late November. Meanwhile, the dollar, which had surged more than 5.0 percent after Trump’s election, was effectively back to its Election Day level.

The real pain trade on Wednesday, though, was in stocks. Through the end of last week, the S&P 500 index had gained more than 12 percent, and while the index has seen one other day since last November’s election in which it fell by more than 1.0 percent, Wednesday’s drop of 1.7 percent was its largest one-day fall in eight months.

With Washington policymakers distracted by Trump’s political problems, investors were betting on a longer timeline to get to tax reform. Nonetheless, Speaker Paul Ryan said that Republicans were determined to keep pursuing tax reform, although such efforts could be seriously hampered. Democratic Representative Jim Himes, a member of the House Intelligence Committee, told MSNBC that the “legislative agenda…(was) in ruins.”

Investors have become increasingly bearish on domestic equities versus international ones, pulling a total of $11.2 billion from U.S.-based domestic stock funds, according to Thomson Reuters Lipper data, and are stampeding into stock funds that invest in Europe.

A long shot worry is the uncertainty that could be presented if Trump is impeached. A small but growing number of Trump’s fellow Republicans called for an independent probe of possible collusion between his 2016 campaign and Russia, and one mentioned impeachment. And word on the Street is that would not necessarily be a market negative if Vice President Mike Pence were to take over.

Odds Not in Trump’s Favor

Online betting markets are increasingly seeing action on bets predicting President Trump’s impeachment in the wake of controversies surrounding the dismissal of FBI Director James Comey.

On online political stock market PredictIt, chances of Trump being impeached in 2017 hit a record 30 percent late Tuesday on heavy volume, following reports of a memo written by Comey that said Trump had asked him to end the FBI’s investigation into ties between former White House national security adviser Michael Flynn and Russia.

As of mid-morning Wednesday, the numbers fell to about 27 percent but were still significantly higher than 7 percent just last Monday. Trading volume was also at a record of 60,700 bets, up from just 5,500 on May 8.

PredictIt is jointly run by Washington political consultancy Aristotle and Victoria University in Wellington, New Zealand. All of its users are registered U.S. voters.

British bookmaker Betfair also said that punters had bet more than 5,000 pounds ($6,470) on an early departure for Trump in the hours after it was reported Trump had asked Comey to shut down the Russia investigation.

Another British betting firm Ladbrokes cut the price of a Trump impeachment to odds-on at 4-5 from 11-10, equivalent to about 56 percent probability that Trump will be removed from office.

“Political punters are wondering how many more scandals can Trump overcome,” said Ladbrokes spokeswoman Jessica Bridge. “And despite the short price on offer, money has poured in for the President to be impeached, leaving us with little option but to cut the odds.”

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