US stocks closed sharply lower on Wednesday due to the market concerns on whether the Trump administration could continue to push its economic reform agenda.
"The market is responding to the probability that tax reform, infrastructure spending, healthcare reform and trade deals might not occur," Xinhua quoted Brendan Ahern, Chief Investment Officer of Krane Funds Advisors, as saying.
The Dow Jones industrial average ended 372.82 points lower, a steep fall driven mainly by share declines in Dow components Goldman Sachs and J.P. Morgan Chase.
Shares of Goldman Sachs dropped 5.27 per cent to $213.72 while J.P. Morgan Chase closed down 3.81 per cent to $84.27.
The broader S&P 500 dropped 43.64 points, or 1.82 per cent, with financials tumbling more than three per cent.
The financial sector had been the best performer in what Wall Street called "Trump Rally," since Trump assumed office and promised large-scale deregulation and tax reform.
The tech heavy Nasdaq declined 2.57 per cent, or 158.63 points to 6,011.24. The index notched record close in two consecutive sessions on Monday and Tuesday.
"The US equity market rally has been driven by the pro-growth agenda proposed by the president and supported by the Republican majority in Congress," said Ahern, adding that the situation has changed.
Analysts said the latest White House controversies have weighed on market sentiment and the market performance on Wednesday was a typical flight to safety as political turmoil triggered investor concerns.
"Recent political distractions have the potential to derail the implementation of such policies that have helped support the rising US stock market," Ahern said.
The White House pushed back against a new wave of media allegations that Trump might have tried to obstruct justice by asking ex-FBI Director James Comey to end a probe into former national security adviser Michael Flynn.
"I hope you can let this go," Trump told Comey at the time, according to a New York Times report, quoting two people who read the memo Comey wrote shortly after meeting with Trump in the Oval Office one day after Flynn resigned over a Russia-related scandal in February.
Investors have been shocked by the news and worried Trump's ability to deliver on business-friendly policies.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped 46.38 per cent to 15.59. Just a week earlier, the index hit 9.77, lowest in more than two decades.
Analysts noted that it was the first time that markets have hinted at risk-off behaviour in response to increased political risk in Washington. Talking about market outlook, some warned investors of possible downward trend.
"Some of the technicals have turned negative, such as an apparently imminent bearish crossover on a six-month snapshot of the Moving Average Convergence Divergence. Relative strength also indicates a market closer to an 'overbought' condition than it is to neutral," Stephen Guilfoyle, president of Sarge986 LLC, wrote in a note.
"Despite strong corporate earnings, U.S. equity market valuations are high compared to emerging market and European equities. Investors are apt to use U.S. weakness as opportunity to rebalance to less expensive markets," said Ahern.
Market demand for safe-haven currencies soared on Wednesday, with Japanese yen rising over 1.8 per cent against the dollar during the session.
The US dollar decreased against most major currencies. The dollar index, which measures the greenback against six major peers, was down 0.61 per cent at 97.506 in late trading.
Gold futures on the COMEX division of the New York Mercantile Exchange rose sharply. The most active gold contract for June delivery jumped $22.3, or 1.80 per cent, to settle at $1,258.7 per ounce.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)