The Dow Jones Industrial Average traded about 100 points lower after falling more than 200 points. The S&P 500 was down 0.6% as of 2:15 p.m ET after dropping more than 1%.
Stock reached session lows after House Speaker Nancy Pelosi said she will make an announcement on possibly beginning impeaching proceedings on Trump.
Pelosi’ announcement will come at 5 p.m. ET after she meets with her caucus to discuss a call Trump had earlier this year with Ukraine’s leader, Volodymyr Zelensky, where he allegedly pressured him to investigate Democratic presidential hopeful Joe Biden’s family. A spokesman for the former vice president said Biden will urge Trump to comply with congressional requests for information. The spokesman added that Biden thinks Congress has no choice but to impeach Trump if he does not comply. Trump has admitted to talking to Zelensky about Biden but denied pressuring him.
Rep. John Lewis, D-GA, tweeted in support of Trump’s impeachment, noting: “The future of our democracy is at stake.” Other prominent Democrats, including Sen. Dick Durbin of Illinois, also called on Tuesday for Trump’s impeachment.
“In any news-driven market, that could have contributed to selling here, and then Biden came out and said ‘I support impeachment.’ Up until this point, I thought the political stuff didn’t mean anything. Now that it becomes real, I can’t discount it,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Stocks have been on fire since Trump was elected. The Dow has surged more than 46% in that time. However, stocks have previously struggled when a president faces the possibility of impeachment.
In 1998, the S&P 500 fell about 20% at one point from its high to its low as independent counsel Kenneth Starr ramped up his investigation of President Bill Clinton for perjury and obstruction of justice, according to CFRA. The market would bottom as the House began impeachment proceedings and then would later recover all those losses and hit an all-time high in November of that year.
The major indexes rose earlier in the day after Bloomberg News reported China granted new waivers to several companies exempting them from tariffs on at least 2 million tons of U.S. soybeans. The report added some companies have already bought about 1.2 million tons of soybeans.
Treasury Secretary Steven Mnuchin also confirmed trade talks between the world’s two largest economies would resume next month. In an interview with Fox Business, Mnuchin said negotiators from the U.S. and China had made some progress in last week’s deputy-level meetings.
The dispute between Washington and Beijing has dragged on for well over a year, battering financial markets and souring business and consumer sentiment. However, the optimism around trade dampened slightly after Trump said he would not accept a “bad deal” with China.
“We had two negative items at once. That kind of canceled the good news from this morning,” said Ilya Feygin, senior strategist at WallachBeth Capital.
Stocks also lost steam following disappointing consumer confidence data. Consumer confidence for September slipped to 125.1 from 135.1 in August. Economists polled by Reuters expected a dip to 133.5.
Stocks entered Tuesday’s session within striking distance of their record highs. The Dow and S&P 500 were more than 1% below their all-time highs through Monday’s close. The Nasdaq, meanwhile, was 2.7% away from reaching its record.
“While the market remains in an uptrend, we are seeing some evidence from our technical indicators that the S&P 500 may need further time to consolidate before attempting to make a new all-time high,” J.C. O’Hara, chief market technician at MKM Partners, said in a note. “Overall, we are still constructive on the market but believe the call is to look at individual stocks for alpha generation, rather than a broad-based market call.”
