Concern that President Donald Trump's reform agenda could be slowed down, and that Trump himself could even face the threat of impeachment, added to disappointing U.S. economic data on Wednesday to hit the dollar and spur a pullback from richly valued stocks.
The Dow opened 170 points lower on Wednesday morning, with the S&P 500 and Nasdaq composite pulling back 18.75 and 44 points, respectively.
Reports that Trump asked then-FBI Director James Comey to end a probe into his former national security adviser have raised questions over whether obstruction of justice charges could be laid against the president.
This follows a week of turmoil at the White House after Trump fired Comey and then discussed sensitive national security information about Islamic State with Russian Foreign Minister Sergei Lavrov.
So far, broadly upbeat global growth has underpinned risky assets and supported the multi-year lows in measures of market volatility.
Dollar Now Back to Pre-Election Value
But the retreat in the dollar, which has now given up all the gains it made following Trump's presidential election win in November, and a pull-back from record highs for world stocks points to investor unease about this week's headlines.
"The Trump issue seems to come in waves, and now we have another wave," said Hans Peterson, global head of asset allocation, at SEB Investments.
"I have been asked if he is going to be impeached. I think that is the type of discussion some (investors) are having," Peterson said, pointing out that institutional clients are turning cautious.
U.S. stock futures were off 0.5 percent, though they were still close to record highs.