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XAutoplay: On | Off U.S. stock indexes sold off hard Wednesday morning, scoring potentially the biggest percentage losses in several months.
The Nasdaq knifed 1.8% lower. The S&P 500 and the blue chip Dow Jones industrial average severed 1.3%, both undercutting their 50-day lines. The small-cap Russell 2000 skidded 2.1%, also moving below its 50-day. Volume in the stock market today got off to a fast start. Both the NYSE and the Nasdaq showed sharply higher volume.
The early losses were on track to be the biggest daily dents since March 21.
Some market commentators blamed the stock market’s drop on news that President Trump may have obstructed justice before firing former FBI chief James Comey. But history suggests such accusations don’t get far unless the president’s political enemies are the party in power. Richard Nixon, who resigned under threat of impeachment, faced a Democratic House and Senate. Bill Clinton, who was impeached in 1998, but acquitted in the Senate, faced a Republican House and Senate.
A two-thirds majority in the U.S. Senate is needed to convict a president, and it would take quite a climate shift for that to happen. The Republicans control both chambers.
Still, an embattled Trump will have a tough time getting a tax cut plan and other pro-growth agenda items through Congress.
Meanwhile, the stock market sell-off may simply show money being taken off the table after a fine run. Since late June 2016, the Nasdaq has advanced almost 35%.
In the IBD 50, a proxy for top-rated growth stocks, losers led gainers by a more than 15-1 ratio. Since starting an advance in late June, the IBD 50 has risen 37%.
In economic news, the Mortgage Bankers Association reported its mortgage applications index decreased 4.1% from the prior week. Oil prices were up after the Energy Department reported the first U.S. production drop in months.