Stocks fell Monday on worries of more political turmoil out of the White House ahead of crucial midterm elections where the Republican party is trying to hold onto both houses of Congress. Equities were also under pressure by the cancellation of U.S.-China trade talks.
The Dow Jones Industrial Average closed 181.45 points lower at 26,562.05 and dropped nearly 200 points at its lows of the day. The S&P 500 declined 0.4 percent to 2,919.37. The Nasdaq Composite rose 0.1 percent to 7,993.25, however, as Netflix shares gained 2.3 percent. Boeing and General Electric were among the big losers.
Stocks began falling to session lows shortly after trading began on reports that Deputy Attorney General Rod Rosenstein was about to resign or be fired. The White House later said in a statement Rosenstein and President Donald Trump will meet on Thursday amid the conflicting reports.
"Certainly the fact that you have such contention within the administration is not the sort of stability markets like to see. To have a such a high-level official resign is a part of that," said Bruce McCain, chief investment strategist at Key Private Bank.
Larry McDonald, founder of the Bear Traps Report, said Rosenstein's resignation could lead to more trouble for the Republicans in the upcoming midterm elections.
"I can't see this helping the midterms for the Republicans and the Trump agenda will be frozen in ice and possibly reversed," he said. "If Rosenstein is gone, it emboldens Trump's base, but it's not going to help him with Democrats as well as middle-of-the-road voter that wants to give the Mueller investigation the benefit of the doubt."
An NBC-Wall Street Journal poll showed Democrats leading Republicans by 12 points on a generic ballot, a lead wide enough for Democrats to win control of not only the House, but possibly the Senate.
Equities had already been under pressure earlier as new tariffs on U.S. and Chinese goods took effect while both countries also cancelled trade talks.
The Wall Street Journal first reported late Friday that China had cancelled talks with the U.S. on trade as both countries impose tariffs on billions of dollars worth of their goods. The two sides were set to meet in order to dial back tensions, but the Journal reported that China rescinded a proposal to send two delegations to Washington. Other news outlets matched the Journal's reporting throughout the weekend.