Stocks on Wall Street fell Tuesday as House Democrats met to consider a potential impeachment investigation of President Trump and a report showed a drop in consumer confidence.
After a higher open, stocks declined as the Conference Board, a business research group, reported that its consumer confidence index fell to 125.1 in September from a revised August reading of 134.2. That’s worrisome because consumer spending has underpinned the nation’s economy during a slowdown in manufacturing.
Stocks’ declines intensified after reports said a growing number of Democrats were in favor of launching an impeachment inquiry against Trump and House Democrats were meeting to consider the possibility. Stocks recovered somewhat after Trump said he plans to release the full transcript of a July phone call with Ukraine’s president that is at the center of the impeachment discussions.
It was the market’s most volatile day this month. The Dow Jones industrial average swung from a gain of about 130 points to a loss of about 245 points as headlines on economics and politics grabbed investors’ attention. The Dow finished down 142 points.
“News of increased likelihood of impeachment proceedings has just added to this overall level of uncertainty that’s out there right now,” said Willie Delwiche, investment strategist at Baird.
House Speaker Nancy Pelosi (D-San Francisco) announced after the market closed that the House is moving forward with an official impeachment inquiry.
Tuesday’s swings disrupted the relative calm that has distinguished the stock market this month. Traders sought safety: They piled into bonds, sending yields sharply down. They also bid up shares of utilities and household goods makers. All other sectors declined.
The Standard & Poor’s 500 index slid 25.18 points, or 0.8%, to 2,966.60. The benchmark index remains within 2% of the all-time high it set in July.
The Dow fell 142.22 points, or 0.5%, to 26,807.77. The Nasdaq dropped 118.84 points, or 1.5%, to 7,993.63.
Traders also turned away from smaller-company stocks. The Russell 2000 index sank 24.66 points, or 1.6%, to 1,533.59.
Trade news was also in the mix Tuesday. Investors were optimistic after U.S. Treasury Secretary Steven T. Mnuchin confirmed that trade negotiations with China will resume the week of Oct. 7. But Trump dampened that sentiment with remarks before the United Nations General Assembly, where he emphasized the need for a fair trade deal with China and threatened more tariffs.
“Trump’s speech to the U.N. did not seem conciliatory toward China,” Delwiche said. “The speech today didn’t suggest that there was anything imminent in terms of good news from a trade perspective.”
The market started the month strong and has had a mostly positive run as traders felt optimistic about U.S.-China trade, but stocks’ gains have become weaker as September nears its end. The S&P 500 notched a 2.8% gain the first week of the month but is now on track for a gain of only 1.4%.
History shows the impeachment of a president doesn’t necessarily mean disaster for the stock market.
The S&P 500 dropped 1.7% on Sept. 9, 1998, when Independent Counsel Kenneth Starr delivered his report to Congress on possible impeachable offenses by then-President Clinton. But concern that slumping economies abroad would drag down the U.S. economy was the bigger story of the day for the market.
Two days later, when Starr’s report was released to the public, the S&P 500 jumped 2.9% after investors saw the allegations weren’t as bad as some had feared.
Stocks veered up and down in the weeks that followed but were solidly higher when the House of Representatives voted in December 1998 to impeach Clinton. When trading opened for the first time after just the second impeachment in the nation’s history, the S&P 500 rose 1.2%.
Stocks would keep jumping as they inflated until the dot-com bubble burst in 2000.
Technology stocks accounted for a big slice of the market’s decline Tuesday. Intel fell 2.1%. Qualcomm lost 2.6%.
Energy stocks also dragged on the market as crude oil prices fell 2.3%. Schlumberger shares slid 4.7%. Halliburton shares sank 5.4%.
Investors bid up shares of consumer product makers and utilities. Those two sectors are typically considered safer places to shift money when economic growth is uncertain.
Bonds rose, pushing yields down —a sign investors were becoming more cautious after the weak consumer confidence data. The yield on the 10-year Treasury slipped to 1.64% from 1.7%.
Banks stocks slid on the lower bond yields. Citigroup shares fell 2.4%.
AutoZone fell 4.4% after the auto parts retailer posted quarterly sales that fell shy of Wall Street forecasts.
Benchmark crude oil fell $1.35 to $57.29 a barrel. Brent crude oil, the international standard, dropped $1.67 to $63.10 a barrel. Wholesale gasoline fell 3 cents to $1.65 a gallon. Heating oil declined 3 cents to $1.97 a gallon. Natural gas fell 3 cents to $2.50 per 1,000 cubic feet.
Gold rose $8.40 to $1,532.10 an ounce. Silver fell 8 cents to $18.52 an ounce. Copper stayed at $2.59 a pound.