Stocks face biggest drop in months as Comey memo creates a stir on Wall Street.
US stocks faced heavy losses Wednesday, as investors weighed allegations that the Trump administration tried to obstruct an FBI investigation over Russia’s involvement in the November presidential election.
The large-cap S&P 500 Index (NYSARCA:SPY) declined 1.8% to close at 2,357.03, with nine of 11 sectors finishing in the red.
Financials stocks faced the heaviest losses, closing down 3%. Shares of information technology companies shed 2.8%.
Plunging tech shares knocked the Nasdaq Composite Index (NYSEARCA:QQQ) from record territory. The index suffered the biggest percentage drop, falling 2.6% to 6,011.24.
Meanwhile, the Dow Jones Industrial Average (NYSEARCA:DIA) plunged 372.82 points, or 1.8%, to finish at 20,606.93.
The Chicago Board Options Exchange (CBOE) Volatility Index (NYSEARCA:VXX) surged more than 46% on Wednesday to close at its highest level in nearly a month. Wall Street’s fear gauge climbed 46.4% to 15.59. The gain pushed relative strength into bullish territory, possibly hinting at an imminent reversal for the VIX.
The selloff was triggered by a memo that surfaced on Tuesday, in which then-FBI director James Comey alleges that President Trump asked him to end an investigation over Michael Flynn, the former national security adviser. Flynn resigned in February after he admitted to misleading Vice President Michael Pence about his communications with Russian officials.
A decline in equities fueled a large rally in precious metals and other haven assets. Gold prices rose nearly 2% to close at their highest level in nearly two weeks.
The Final Word: The Washington-driven selloff triggered massive volatility in the market. Volatility of this nature has reared its ugly head several times this year, as investors began to doubt the so-called Trump rally.