At 10:46 a.m. ET, the Dow Jones Industrial Average .DJI was down 234.47 points, or 1.12 percent, at 20,745.28, the S&P 500 .SPX was down 24.18 points, or 1.01 percent, at 2,376.49 and the Nasdaq Composite index .IXIC was down 83.65 points, or 1.36 percent, at 6,086.22. The S&P 500 lost 43.64 points, or 1.82 percent, to 2,357.03.
Small-company stocks, which would stand to benefit greatly from Trumps' proposed tax cuts, fell more than the rest of the market.
"Prior to the election investors expected Trump to represent uncertainty", he said. "Even if President Trump were to prise himself out of these crises, the market thinks that his ambitious reform plans will be discounted and considerably delayed".
Reports that Mr. Trump in February allegedly asked then-FBI Director James Comey to back off the investigation of former national security adviser Michael Flynn upended the laissez-faire view many investors have taken of a tumultuous presidency. What happens if trouble at the White House sends those hopes crashing?
United States equities fell sharply on Wednesday as political turbulence in Washington prompted investors to unwind previous bets based on hopes for tax and other reforms from the Trump administration.
The blue-chip average was led higher by shares of Wal-Mart Stores Inc. which closed up 3.2% as earnings beat Wall Street forecasts, but revenue fell slightly short.
-Benchmark yields in France lost six basis points to 0.83 percent, while those in Germany declined six basis points to 0.378 percent.
Elstein says that about a 2-percent drop will get your attention, but is not a big deal in the grand scheme of things. The blue-chip bank stocks, JPMorgan and Goldman Sachs, had the worst days, dropping 3.8% and 5.3%, respectively.
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The major European markets have also come under pressure on the day.
Restaurant stock Shake Shack Inc (NYSE:SHAK) is up 1.6% in electronic action, thanks to an upgrade to "outperform" from "neutral" at Wedbush.
Both the S&P 500 and the Nasdaq hit record highs yesterday, continuing the rally since Trump's election. The stock shed 64 cents to $19.82. It closed up by 1.5 percent to $37.27.
JACKED: Jack in the Box climbed 5.7 percent after the restaurant chain's latest quarterly results exceeded Wall Street's forecasts.
Disney, Electronic Arts, Voxx and other companies with strong Orlando ties saw their share price drop Wednesday as markets slid on turmoil in Washington D.C.
Unease over the potential implications of the latest political fallout in Washington weighed on the dollar on Wednesday. The dollar strengthened to 111.17 yen from 110.82 yen.
The benchmark ASX 200 index had reached losses around 1.5 per cent earlier in the session, as it followed a global sell-off sparked by fears that US President Donald Trump's economic program would fall by the wayside amid a growing number of scandals.
The Dow Jones 30 fell apart during the day on Wednesday, as market participants are now concerned about a recent conversation between President Trump and Russian dignitaries.