The Comey Effect: Dow Drops 370 Points

Comey, Grassley, Feinstein Carolyn KasterAP
Carolyn KasterAP

Stocks closed sharply down on Wednesday as political chaos in Washington, D.C. dominated headlines.

The Dow Jones Industrial Average fell nearly 373 points, or 1.78 percent. The S&P 500 fell 43.6 points, a decline of 1.82 percent. The Nasdaq Composite index fell 2.57 percent.

It was the worst day for U.S. stocks since September of 2016. The financial sector led the way down, suffering its worst day since last June. Big banks were some of the worst performing stocks of the day.

Stocks have rallied this year on hopes of tax cuts and regulatory reform. Many investors now worry that the Trump administration’s latest political troubles could delay or prevent the implementation of its agenda.  Wednesday’s declines reversed all the gains the market had made in May.

The CBOE Volatility Index, known as the Vix, rose 39 percent Wednesday but still remains low compared with historically normal levels.

Bank of America’s shares fell by almost 6 percent. Several large regional banks also saw big declines. Analysts say falling interest rates are a drag on the bank stocks.