S&P, Dow set for worst day in eight months on Trump turmoil

The Dow Jones Industrial Average was down 254.56 points, or 1.21 percent, to 20,725.19, the S&P 500 had lost 27.87 points, or 1.16 percent, to 2,372.8 and the Nasdaq Composite had dropped 108.10 points, or 1.75 percent, to 6,061.77. The euro broke above $1.11 to levels not seen since Trump's election win in November, while the yen is also piling pressure on the U.S. unit.

"Macron and Merkel seemed more aligned than I expected, with Merkel even saying she wouldn't exclude treaty changes, which the market welcomed", Florian Hense, a senior economist at Berenberg, said.

The S&P 500 and the Nasdaq reached record closing highs on Monday, powered by demand for technology stocks after the weekend's massive "ransomware" cyber attack and as rising oil prices lifted commodity-linked shares.

The VIX, Wall Street's "fear gauge", shot up to 12.8 points and was on track for its biggest one-day percentage increase since August.

"The bull market is not over by any means, but between the political stuff and the fact that the next earnings season is three months away, there's going to be a lack of motivation", said Donald Selkin, chief market strategist at Newbridge Securities in NY.

Asian equities retreated overnight, S&P 500 Index futures slipped and haven assets from gold to the yen advanced as the unrelenting pace of developments threatened to derail Trump administration policy prescriptions cheered by Wall Street.

Utilities and real estate sectors - preferred investment options in times of uncertainty due to their slow but predictable growth - were the only gainers. Insurer Manulife Financial Corp dropped 3.0 per cent to $23.01.

The U.S. dollar sank Wednesday, on track to give back its postelection rally as confidence in the Trump administration's ability to deliver on its economic proposals wanes. A weak greenback makes the precious metal cheaper for non-U.S. investors. Coherus shares rose almost 7 percent to $23.55.

A risk-on undertone meant meagre gains for gold, with the precious metal changing hands at $1,233 per ounce. The euro jumped to the highest level since Trump's election, while the Japanese yen also strengthened with the Mexican peso. On the Nasdaq, 2,249 issues fell and 433 advanced.

Oil prices extended losses after API data showed an unexpected build in USA crude inventories. Brent crude oil was up 30 cents at $52.12 a barrel by 0750 GMT.

USA crude fell 1.27 percent to $48.23 per barrel, and Brent was last at $51.22, down 1.16 percent.

Odds for a June rate hike have dropped to around 64%, according to Investing.com's Fed Rate Monitor Tool, down from more than 80% a week ago.

Brent reached $52.63 a barrel and WTI rose as high as $49.66 on Monday after Saudi Arabia and Russian Federation agreed on the need to extend output curbs by members of the Organization of the Petroleum Exporting Countries and other producers.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Even so, USA policymakers "are in the mindset to raise as long as the markets are prepared for it", he said.

  • Zachary Reyes