After reaching all-time highs on Thursday, stock market futures plunged on Friday morning on fears of problems in Washington, D.C.
On Thursday night, the Republican tax overhaul plan was put into limbo as projections for higher budget deficits and wavering votes threatened to prevent passage of the legislation.
More shocking was news that broke Friday morning that Michael Flynn, the former National Security Advisor to President Trump, was pleading guilty to charges of lying to the FBI regarding conversations with Russia’s ambassador. Flynn is now cooperating with special counsel Robert Mueller’s investigation, which has prompted speculation that Flynn could expose others in the Trump orbit to new charges.
Concerns about threats to the administration, tax plan and overall stability in Washington spooked the Dow lower by over 300 points at one point Friday morning. Prices rebounded into Friday afternoon after Senate Majority Leader Mitch McConnel stated that the Senate had sufficient votes to pass tax legislation, although there are numerous hurdles remaining before the plan becomes law.
Silver prices plummeted this week, approaching $16 per ounce for the first time since August. Prices fell on Wednesday as investors dumped metals in favor of stocks. Expectations for higher interest rates in the coming months also hurt demand for precious metals, as higher interest rates typically make investments in CDs and bonds more lucrative than holding onto metal that doesn’t pay interest.
To others, the drop is presenting a buying opportunity, as silver has rarely been underneath $16 per ounce during the last two years, and silver should benefit from the problems in Washington.
Wheat market withers
Wheat prices drilled into new lows last week, with prices for Chicago and Kansas City wheat futures nearing $4 per bushel. The market lost ground as foreign competitors, like Russia and Australia, undercut American wheat sales.
Adding to Midwestern farmers’ concerns are weather forecasts for a dry and cold winter in many wheat-growing areas. If the dormant wheat crop is damaged over the winter, it could cut into the spring harvest. While this would be detrimental to affected farmers, these threats could provide a much-needed spark to boost wheat prices as well.
By the end of the week, grain prices rebounded, with corn, wheat, and soybeans closing strong on Friday afternoon.