Stocks Drop As Washington Goes Berserk Over Comey Memo

Investors have clearly been spooked by the leak storm swirling around the White House.

Dow Jones Industrial Average fell by more than 280 points, or 1.33 percent, on Wednesday, with Goldman Sachs and Apple being the biggest drag on the market. The broader S&P 500 lost more than 32 points, a decline of 1.34 percent. The Nasdaq was off by 1.85 percent. With two hours to go in trading, stocks are poised to mark their largest drop of 2017.

Banks led the way down. Bank of America shares were off by 5.34 percent. Goldman down by 4.6 percent. Citigroup and J.P. Morgan Chase shares fell by around 3.3 percent. The KBW Bank Index, which tracks a basket of large bank stocks, dropped 3.9 percent. Many bank stocks had rallied in hopes that the Trump administration would provide regulatory relief and ramp up economic growth.

The yield on ten-year Treasuries fell to around 2.23 percent, as investors retreated to so-called safe havens. Yields move in the opposite direction of prices.

The decline in equity prices was not driven by any bad economic data. Instead, it seems pretty clearly to be driven by fears that the Trump administration’s economic agenda could be derailed by the ongoing controversy over the firing of former FBI director James Comey. On Tuesday, the New York Times reported that Comey had written a memo summarizing a conversation with President Donald Trump in which the president allegedly asked him to back off of an investigation into former national security adviser Michael Flynn. The New York Times said Comey associates had read the memo to its reporters.