The deepening hole that the President seems to be digging for himself regarding national security and investigative probes is now putting his legislative program regarding tax cuts and regulatory changes in big trouble. The market toppled today under this pressure with the DOW losing 372 points, the S&P falling 43, and the NASDAQ dropping 158. These downturns took all the profits out of the month of May and then some. The bank stocks took the biggest downside beating today followed by technology, healthcare, retail, and the industrial sectors. Only real estate survived and gained in today’s session.

The markets were willing to ignore most of the drama that started with the firing of F.B.I. Director Comey. However, the story that the President urged the Director not to continue investigating former National Security Advisor Flynn was the straw that broke the market’s back. 

The flight to quality items began to do their thing as the market was blasted early and continued its downward to slide to close at the bottom. The yield on the 10-year Treasury Note fell down to 2.24%, its lowest in a month. The Japanese yen climbed to 111.45 to the dollar and Gold moved up to $1,261 an ounce. Crude oil gained 1/2 a percentage point to close at 49.28 and the VIX soared higher by 40% to finish the day at 15.59. We will have more on the full extent of the damage tomorrow.

Donald M. Selkin

These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning.  The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report.  This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities.  This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm.   This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author.  These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.