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Benchmarks ended in the red on Wednesday following a report on Trump’s interference into the FBI probe regarding Mike Flynn’s involvement with Russian sources. This has made investors worry about the fate of Trump’s pro-growth agenda including tax cuts and deregulation policies. While the Nasdaq posted its worst one-day decline in nearly a year, the Dow and S&P 500 declined below their 50-day moving average for first time since April.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) declined 1.8% or 372.82 points to close at 20,606.93. The S&P 500 fell 1.8% to close at 2,357.03. The Dow and S&P 500 also suffered their worst sessions since September last year. The tech-laden Nasdaq Composite Index declined 2.6% to close at 6,011.24, marking its biggest one-day loss since June 24. A total of around 8.4 billion shares were traded on Wednesday, higher than the last 20-session average of 6.9 billion shares. The fear-gauge CBOE Volatility Index (VIX) spiked more than 40%, reaching to its highest level since late April. Decliners outnumbered advancing stocks on the NYSE by a 3.92 to 1 ratio. 

Mike Flynn’s Involvement with Russian sources

The controversy relating to investigation into former National Security Adviser Mike Flynn’s involvement with Russian sources dampened investor sentiment on Wednesday.  Earlier in February, Mike Flynn had to resign after he was accused of lying to Vice President Mike Pence about his ties with Russia’s ambassador to the U.S. The investigation into Flynn’s involvement with Russian sources has continued after his resignation.

As per New York Times a report on Tuesday, former FBI Director James Comey had written a memo after his meeting with President Trump at the Oval Office in February. According to the memo, Trump had tried to stop the FBI’s probe into former National Security Adviser Michael Flynn's connections with Russia.

The controversy came shortly after Trump unexpectedly dismissed Comey and reportedly shared classified information with Russian officials about an Islamic State operation. “I hope you can see your way clear to letting this go, to letting Flynn go,” Trump told  Comey, as per a memo written by Comey.

However, the White House on Tuesday refused to admit the truth behind the report, saying “the president has never asked Mr. Comey or anyone else to end any investigation. . . . This is not a truthful or accurate portrayal of the conversation between the President and Mr. Comey”. Later on Tuesday, acting FBI Director Andrew McCabe was asked to turn over all memos about Comey’s meetings with Trump by Jason Chaffetz, the Republican chairman of the House Oversight Committee.

After the report, investors raised questions over Trump’s ability to implement his pro-growth agenda including tax cuts and deregulation policies. The broader Financials Select Sector SPDR (XLF) declined 3.2%, emerging as the worst performing sector of S&P 500. Some of the key holdings of the financial sector in the S&P 500 including Bank of America Corp (BAC - Free Report)  and JP Morgan Chase & Co (JPM - Free Report)  fell by 5.9% and 3.8% respectively. Meanwhile, Utilities and real estate sectors, so-called defensive stocks were the only gainers on Wednesday. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Citi Trends Stock Dips Despite Solid Q1 Earnings

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