The Dow Jones Industrial Average dropped by 372.82 points on Wednesday, bringing the giddy post-election rally of the past few months to a halt as investors began to worry about the daily revelations of disarray with President Donald Trump's administration.
It's the first time since Trump's election that the market has snubbed the commander in chief, and a clear indication of waning confidence in the president's ability to fulfill his key promises of tax reform, deregulation, and investment in infrastructure.
The Dow closed at 20,606, with financials such as Goldman Sachs and Morgan Stanley absorbing the most losses.
"This is clearly Washington-driven," Michael Shaoul, chairman and CEO of Marketfield Asset Management, told CNBC. "It's a lot like 1998-99, when the market had to deal with the [Monica] Lewinsky scandal."
Seemingly unflappable until now, investors are clearly spooked that the heightened drama in Washington — including the revelation that Trump asked FBI Director James Comey to halt an investigation into former National Security Adviser Michael Flynn — will swallow up the passage of Trump's promised regulatory reforms and tax cuts. The promise of corporate tax reform in particular was a key factor that propelled the stock market to record highs since Trump's victory in November.
Related: Comey Memo Has White House in a Tailspin
Stocks weren't the only metric impacted by the drama engulfing the White House. The dollar dropped back to pre-election levels; and the "fear" index — the CBOE Volatility Index, which measures the fragility of markets — soared by almost 40 percent on Wednesday, marking the largest gain in eight months.
Predictions that President Trump would be impeached hit a high of 27 percent on Wednesday, according to the online betting site PredictIt.
"An impeachment proceeding would blow the market away," Jack Welch, former CEO of General Electric, told CNBC.
