U.S. equities fell on Thursday on concerns President Trump's recent controversies will make it less likely for Congress to work with him to pass business-friendly legislation.
The Dow Jones industrial average fell 274.14 points, or 1.2 percent, for its biggest drop since May 17, to close at 21,750.73. The index also snapped a four-day winning streak. Cisco Systems was the biggest decliner on the Dow after sales for one of its key segments rose less than expected.
The index started falling earlier on fears that Gary Cohn, a business friendly advisor to the president, could resign his role as director of National Economic Council because of Trump's remarks following the violent protests in Charlottesville, VA.
"This [situation] is definitely disappointing for investors holding out hope for tax reform," Mike Baele, managing director at U.S. Bank Private Client Reserve. "It doesn't mean it's not going to happen, but it certainly" dampens the outlook.
The Dow briefly pared losses when reports indicated Cohn has no plans to resign and it was just speculation. Still, the concern remains that members of Congress and others in the business community would not want to work with the President following the backlash that led Trump to dissolve two CEO advisory forums.
"We've had a lot of things happen recently, so if people want to sell, they have reasons to do it," said Anthony Conroy, president at Abel Noser. "We've also had a couple of really strong days so it's no surprise to see some profit taking."
The S&P 500 pulled back by 1.5 percent to close at 2,430.01— marking its worst with information technology leading all sectors lower.
The Nasdaq composite lagged, falling 1.9 percent to 6,221.91, marking its third-largest daily drop of the year. The Russell 2000, meanwhile, closed below its 200-day moving average — a key technical level — for the first time since June 2016.