The stock market on Wednesday took its biggest dive since before President Trump’s election, as investors began to grapple with the increasing possibility that Washington would be consumed with chaos and fail to enact policies to boost the economy.
The Dow Jones industrial average lost 368 points, or 1.8 percent to 20,611, as a broad array of other indexes all lost ground. Meanwhile, a widely followed measure of volatility known as the VIX, which had been remarkably subdued in recent months, spiked by a dramatic 21 percent, suggesting sharply growing anxiety by investors about a sense of rising political risk in Washington.
The developments are a stark interruption to the slow-and-steady rise in in stock market values since before Trump’s election. While the night of his surprise win in November created immediate uncertainty, with foreign markets selling off, they quickly regained their footing and resumed their years-long climb. Investors cited new hopes that a Washington unified by Republican control would deliver an overhaul of the tax system and a large increase in spending on U.S. infrastructure — two of corporate America’s top policy goals.
The White House embraced the notion of a “Trump Rally,” and cited the gains as evidence of its immediate effect on the economy.
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