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US stocks on Monday faced the heaviest sell-off since before the presidential election in the biggest reversal yet of the so-called Trump trade that has carried equities to record peaks.

The S&P 500 index, a broad barometer of American stock performance, fell as much as 1.2 per cent in late-morning trading in New York. That represented the steepest intraday fall since November 1 and came after it struck a new record high last week.

“Risk assets are under pressure as uncertainty over the Trump administration’s policies and increasing global bond yields weigh on investor sentiment,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI.

The sectors that have performed best since Donald Trump’s surprise victory facing the brunt of the selling.

The energy, financials, industrials and materials sectors were all down by more than 1 per cent. In contrast, defensive plays that have performed poorly amid expectations for higher US economic growth, were largely spared. Utilities and consumer staples were essentially flat, the real estate sector was down marginally.

Traders also moved into other perceived havens. Gold rose by 0.3 per cent to $1,195.02 a troy ounce and the Japanese yen climbed by 1.3 per cent on the US dollar.

The yield on the benchmark 10-year Treasury note, having slipped by as much as 2.4 basis points to 2.46 per cent, was trading largely unchanged at 2.48 per cent in early afternoon trading in New York.

In a sign of the growing jitters, a measure of expected volatility for US stocks jumped by the most on a point-basis since the immediate aftermath of last year’s election.

The CBOE’s Vix index rose as much as 1.95 points to 12.53 on Monday, the largest intraday rise since November 9, the day after Donald Trump’s shock election win.

The index, sometimes called Wall Street’s fear gauge, fell last week to the lowest level in more than two years as the S&P 500 index set a fresh record high, and the Dow Jones Industrial Average topped 20,000 for the first time in history.

Still, even as investors have remained “very constructive” on equities overall, there has been an uptick in traders buying protection against so-called tail risks, or low-probability events that can potentially pack a powerful punch, said Mandy Xu, a derivatives strategist at Credit Suisse.

“We see (a) higher chance of tail event this year given the risk of Trump’s trade and foreign policies,” she added.

Copyright The Financial Times Limited 2018. All rights reserved.

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