Wall Street suffered its worst day in eight months yesterday as investors grow concerned over the political situation in the US.
The S&P 500 and the Dow Jones Industrial Average both suffered their biggest one-day fall since September 2016. The Dow Jones, in particular, fell more than 370 points as turmoil over the Trump administration begins to affect the financial markets.
Nasdaq had its steepest one-day loss since last June, after the UK voted to leave the European Union, as did S&P’s financial and technology sectors.
Yesterday market one of the biggest trading days in months, as about 8.37bn shares changed hands on US exchanges, compared with the 6.9bn-share average for the last 20 sessions.
What’s the cause for concern?
Reports came out this week that alleged the US president Donald Trump tried to interfere with a federal investigation over his campaign’s links to Russia and the Kremlin.
Trump reportedly asked then-FBI director James Comey to drop an investigation into his ex-national security adviser Michael Flynn and his contacts with Russia.
According to a memo written by Comey, who was fired last week by Trump, the president said: “I hope you can let this go.”
There has been an ongoing investigation into the Trump administration’s links to Russia for the past few months however, it reached breaking points last week when Trump fired Comey, only the second time an FBI director has ever been dismissed.
As well, Trump allegedly disclosed classified information to Russia’s foreign minister on a visit last week about a planned so-called Islamic State (IS) operation, which has had the US’s allies concerned over the capability of Trump to be president.
Back in November, Wall Street celebrated when Trump entered the White House with a record-setting post-election stock rally due to the president’s promises for tax cuts, deregulation, and fiscal stimulus.
However, the recent mishaps have led to doubts that he will be able to follow through on these pledges.
Micheal O’Rourk, chief market strategist at JonesTrading in Connecticut, said:
“We’ve seen the Trump agenda derailed and try to get back on track several times. It’s registering with more investors that it’s going to be hard to get back on track with the latest allegations.
“Prior to the election investors expected Trump to represent uncertainty. The market is now recognising that some of the fears they had back in October are coming back to fruition.”