Wall Street tumbles as reform hopes fade with Trump crisis

The S&P 500 and the Dow notched their biggest one-day fall since Sept. 9 as investor hopes for tax cuts and other pro-business policies faded after reports that U.S. President Donald Trump tried to interfere with a federal investigation set off alarm bells on Wall Street.

Former FBI chief James Comey said in a memo that Trump had asked him to end a probe into former National Security Adviser Michael Flynn’s ties with Russia, the reports said.

That was only the latest worry in a tumultuous week at the White House after Trump unexpectedly fired Comey and reportedly disclosed classified information to Russia’s foreign minister about a planned Islamic State operation.

The developments intensified doubts that Trump would be able to follow through on his promises for tax cuts, deregulation and fiscal stimulus. Those pledges had helped fuel a record-setting post-election rally on Wall Street.

Selling accelerated late in the afternoon of one of the busiest trading days in months and the three major indexes ended near session lows.

“We’ve seen the Trump agenda derailed and try to get back on track several times. It’s registering with more investors that its going to be hard to get back on track with the latest allegations,” Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

“Prior to the election investors expected Trump to represent uncertainty,” he said. “The market is now recognizing that some of the fears they had back in October are coming to fruition.”

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