Dow Jones closes down 360 points at lowest point of the year as market loses confidence in President Trump

  • The drop was the largest one-day decrease for on indicators since September 
  • The Dow Jones average fell 360 points by the ending of trading on Wednesday 
  • Wall Street's 'fear gauge' - the Volatility Index - hit its highest point since April
  • Market turmoil came one day after it was reported Donald Trump asked then-FBI Director James Comey to end the investigation into ex-national security adviser

By Liam Quinn For Dailymail.com

Published: 16:45 EST, 17 May 2017 | Updated: 18:41 EST, 17 May 2017

The market took its biggest one-day tumble since September and stocks fell sharply in late-afternoon trading Wednesday as investors appeared to lose faith in Donald Trump's presidency.

The steep drop, which sent the Dow Jones industrial average down 360 points, ended an unusually long period of calm in the markets.

Financial stocks, which had soared in the months since the election, slumped the most as bond yields declined and traders piled into utilities, gold and other traditional safe-haven assets. 

The S&P 500 was also tracking towards the biggest one-day drop in more than seven months. 

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The market took its biggest one-day tumble since September and stocks fell sharply in late-afternoon trading Wednesday as investors appeared to lose faith in Donald Trump's presidency. Pictured is a trader with his head in his hand on Wednesday

The market took its biggest one-day tumble since September and stocks fell sharply in late-afternoon trading Wednesday as investors appeared to lose faith in Donald Trump's presidency. Pictured is a trader with his head in his hand on Wednesday

The poor performance came the day after reports of a memo written by former FBI Director James Comey that suggested President Trump tried to tamper with the Bureau's investigation into potential Russian interference during the election.

WHAT WERE THE LOSSES WEDNESDAY? 

S&P 500: Down 40.55 points, or 1.7 per cent 

Dow Jones: Down 347.56 points, or 1.7 per cent 

Nasdaq: Down 146.00 points, or 2.4 per cent

US Dollar: Down 0.72, or 0.73 per cent

The report set off alarm bells across Wall Street. 

Trump had asked Comey to end a probe into former National Security Adviser Michael Flynn's ties with Russia, the reports stated.

It was only the latest worry in a tumultuous week at the White House when Trump unexpectedly fired Comey and then disclosed classified information to Russia's foreign minister about a planned Islamic State operation.

The latest developments intensified worries about whether or when Trump will be able to implement proposals for business-friendly policies such as tax cuts and deregulation, which have underpinned a record-setting rally on Wall Street.

The three major Wall Street indexes hit session lows in late afternoon trading after the S&P 500 fell below 2369.23, its 50-day moving average.

Specialist Gregg Maloney works at his post on the floor of the New York Stock Exchange, Wednesday, May 17

Specialist Gregg Maloney works at his post on the floor of the New York Stock Exchange, Wednesday, May 17

These graphs show how the NYSE and the S&P500 performed on Wednesday

These graphs show how the NYSE and the S&P500 performed on Wednesday

'As the afternoon wears on and the market doesn't find support, sellers just pile on,' Ken Polcari, Director of the NYSE floor division at O´Neil Securities in New York, said. 

Polcari added he expected the market to fall even further.

Bank stocks, which outperformed in the post-election rally, were the worst hit. 

The S&P 500 bank sub-sector was down 4.5 percent while the broader financial sector sank 3.4 per cent, led by a 6.2 percent decline in Bank of America stocks and a 4 percent drop for JPMorgan.

'This is the unwinding of the Trump trade as people are losing any optimism he might get his agenda through,' Robert Phipps, director at Per Stirling Capital Management, said.

'What's interesting is that the sell off is so small.'

These charts show how Wall Street and the S&P500 have performed since September last year

These charts show how Wall Street and the S&P500 have performed since September last year

Both the Dow and the S&P 500 fell below their 50-day moving average for first time since late April. 

The S&P began the session by opening 0.74 per cent lower, the largest gap down since March 30, 2009, when the index suffered a 0.84 per cent drop at the start of trading.

At 2:49 pm, the Dow Jones Industrial Average was down 347.56 points, or 1.66 per cent, to 20,632.19, the S&P 500 had lost 40.55 points, or 1.69 per cent, to 2,360.12 and the Nasdaq Composite had dropped 146.00 points, or 2.37 per cent, to 6,023.87.

The VIX, Wall Street's 'fear gauge', shot up to 14.57, its highest level since April 21.

Donald Trump speaks during a news conference with Recep Tayyip Erdogan, Turkey's president, at the White House on May 16

Donald Trump speaks during a news conference with Recep Tayyip Erdogan, Turkey's president, at the White House on May 16

Eight of the 11 major S&P 500 sectors were lower.

The only gainers were utilities, real estate and consumer staples sectors - so-called defensive stocks which often do well in times of uncertainty due to their predictable if slow growth and high dividend yields.

Declining issues outnumbered advancing ones on the NYSE by a 3.60-to-1 ratio; on Nasdaq, a 5.48-to-1 ratio favored decliners.

The S&P 500 posted 9 new 52-week highs and 19 new lows; the Nasdaq Composite recorded 25 new highs and 84 new lows.

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