US stocks took a nosedive on Wednesday, plummeting to new lows as investors' concerns over President Donald Trump's Russia controversy rose. All three major markets dropped to their worst daily decline in months, with the Dow and S&P 500 hitting their worst drop since September and the Nasdaq suffering its biggest decline since June.
The Dow Jones Industrial Average declined 372.82 points, or 1.8%, to 20,606.93 for its steepest decline since 9 September. According to MarketWatch, financials suffered the biggest loses, down more than 3%. Goldman Sachs Group Inc fell 5.3%, while JP Morgan Chase & Co dropped 3.8%.
The S&P 500 index sank 43.64 points, or 1.8%, to settle at 2,357.03 for the worst drop since 9 September. Financials, which lead decliners, were dragged down by banks, with the SPDR S&P Bank ETF (KBE) falling 3.9%, CNBC reported.
Meanwhile, the Nasdaq Composite saw its worst-day decline since the day after the Brexit referendum. The index dropped 158.63 points, or 2.6%, to close at 6,011.24.
"This is clearly Washington-driven," Michael Shaoul, chairman and CEO of Marketfield Asset Management, told CNBC. "It's a lot like 1998-99, when the market had to deal with the [Monica] Lewinsky scandal."
The Trump administration has been besieged by several scandals in the last week, with reports emerging that Trump divulged sensitive classified information to Russian diplomats and also asked former FBI Director James Comey to stop a federal investigation into Michael Flynn, his former national security adviser.
The latter was discovered in a memo written by Comey to allegedly create a paper trail of what he perceived to be inappropriate intervention attempts by the president. Late on Tuesday (16 May), House Oversight Committee Chairman Jason Chaffetz requested the FBI turn over any records it has on communications between Trump and Comey.
The CBOE Volatility Index, which tracks implied volatility on the S&P 500 30 days in the future, rose 46% to 15.59, MarketWatch reported. The increase marks the biggest daily climb since after Brexit in June 2016.
"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," Ian Winer, head of equities at Wedbush Securities, said.
According to CNBC, traditional safe havens rose with the benchmark 10-year yield falling to around 2.21%. Gold rose 1.8% to $1,258.70 an ounce and oil prices climbed 0.8% to settle at $49.07 a barrel.
Meanwhile, the yen rose against the dollar to trade at 110.99. The ICE Dollar Index, which dropped to its lowest level since before the US presidential election earlier in the session, rebounded to trade at 97.51.
In a note Monday (15 May), Andy Brenner, head of international fixed income securities at National Alliance Securities, said: "If special prosecutors are hired or there is more talk about obstruction of justice being an impeachable offense, one can kiss the tax plan, healthcare plan, and fiscal stimulus plan goodbye for 2017."