Stocks added to losses on Wednesday morning as another Donald Trump scandal put his agenda in jeopardy for the second time this week.
The S&P 500 was down 1.1%, the Dow Jones Industrial Average fell 1.1%, and the Nasdaq slid 1.4%.
Trump asked former FBI Director James Comey to shut down the federal investigation into since-ousted National Security Adviser Michael Flynn, The New York Times reported Tuesday evening. Flynn was forced to resign on Feb. 13 amid questions over his contact with the Russian ambassador to the United States and discussions of U.S. sanctions.
"I hope you can see your way clear to letting this go, to letting Flynn go," Trump told Comey, recorded in a memo written by the former FBI director. "He is a good guy. I hope you can let this go."
Comey wrote the memo detailing his conversation with the president shortly after it took place, according to the Times, which cited two people who read the memo. It is part of a paper trail Comey created documenting what he believed to be improper efforts to influence the investigation. Trump made the surprise move of firing Comey, head of an investigation into Trump and his campaign's alleged ties with Russia, early last week.
The Times report may present the clearest evidence yet that the president has tried to influence government investigations into links between Russia and the Trump campaign.
Only a day earlier, news broke that Trump divulged highly classified intelligence to Russia during a meeting last week, according to a shocking report from The Washington Post. Trump reportedly shared top-secret information on the fight against ISIS with Russian Foreign Minister Sergey Lavrov and Russian Ambassador Sergey Kislyak in a meeting in which U.S. media was barred. The meeting raised eyebrows just a day after Trump fired Comey.
Markets have rallied since the November election on Trump's pro-business agenda. However, the latest flood of distractions appears to have put progress on tax reform on the backburner. The scandals also distract from Trump's first official trip abroad as president later this week. Trump is set to travel to Saudi Arabia, Israel, and Vatican City.
"Stocks have taken to selling off on bad Trump-related news, first with Comey (and now again with Comey) and then with the alleged comments made to a Russian diplomat," Brian Sozzi wrote over on our premium site for investors, Real Money. "This reaction by stocks could indicate the first signs of investors losing confidence in what Trump could get accomplished."
However, others argued that this could be a natural "buy-the-dip scenario" given stocks recently reached all-time highs.
"As investors turn to safe havens like gold, a pullback can present buying opportunities," Mike Loewengart, vice president of investment strategy at E*TRADE, wrote in a note. "Further, this isn't the first negative headline we've seen and I wager that most feel it won't be the last. While no one knows what the future holds, if the market has illustrated anything in the past few months, it's that resiliency to political headwinds may be a crowning attribute."
Safe-haven assets were higher on Wednesday. Gold prices climbed 1.7% to $1,257.40 an ounce, and silver prices increased 1.5% to $17 an ounce.
Financials stocks were the worst performers on Wednesday. JPMorgan (JPM) , Wells Fargo (WFC) , Bank of America (BAC) , HSBC (HSBC) , Citigroup (C) , and Goldman Sachs (GS) were sharply lower, while the Financial Select Sector SPDR ETF (XLF) slid 2.1%.
Crude prices surged on Wednesday after U.S. crude inventories declined for their sixth week in a row. Crude stockpiles fell by 1.8 million barrels in the week ended May 12, according to the Energy Information Administration. Gasoline and distillate stockpiles also dropped.
Oil settled at two-week highs earlier in the week after energy ministers from Russia and Saudi Arabia surprised markets by calling for an extension to an oil production cap agreement. An extension to the OPEC deal will be the main point of conversation when the 13 member countries meet in Vienna on May 25. The current agreement, established last November, is set to expire at the end of June.
West Texas Intermediate crude was up 1.3% to $49.28 a barrel on Wednesday morning.
Target (TGT) increased 3% after topping quarterly estimates. The department store chain earned $1.23 a share, up from $105 a share in the year-ago quarter. Adjusted earnings of $1.21 a share soared past consensus of 91 cents a share. Sales of $16.02 billion came in higher than a target of $15.62 billion. Second-quarter profit guidance of 95 cents to $1.15 a share wrapped analysts' target of $1 a share.
Urban Outfitters (URBN) declined after disappointing quarterly sales. Revenue inched 0.2% lower over its recent quarter to $761 million, falling short of consensus by $8.8 million. Net income of 10 cents a share missed estimates by 6 cents.
American Eagle Outfitters (AEO) tumbled 8% on disappointing guidance for its second quarter. Earnings are anticipated between 15 cents and 17 cents, below a target of 23 cents, while same-store sales are expected to come in flat to down in the low single percentages. Analysts expected same-store sales to grow 0.5%. First-quarter profit came in short of estimates, though the teen retailer did post surprise growth in same-store sales.
Qualcomm (QCOM) raised the ante in its dispute with Apple (AAPL) over royalty fees by suing four of the company's suppliers in U.S. District Court for the Southern District of California. The companies include Foxconn, Compal, Wistron and Pegatron. Apple first sued Qualcomm in January, saying that the company was collecting royalty fees for "technologies they have nothing to do with."
Ford (F) confirmed reports of job cuts on Wednesday, announcing plans to cut workforce costs by roughly 10% in North America and the Asia Pacific this year. The automaker will offer voluntary packages. Ford expects to reduce its employee base by as many as 1,400 jobs by September.