On the first day of trading since legislation to ‘repeal and replace’ Obamacare died without a House vote because Donald Trump failed to close the deal with Republican lawmakers, Wall Street stood at a six-week low.
After losing one percent of its value, the Dow Jones Industrial Average recovered some ground before noon, but was still down more than 50 points at 2 PM EDT.
According to Reuters, investors doubt that the president can push through the parts of his agenda that had led to a bull market after his election in November. The has them changing their market positions.
“It is less of a panic sell and more of digesting the information and looking beyond the healthcare reform act to the next bit of information, which is going to be tax reform and spending on infrastructure,” said Mark Watkins, regional investment manager at the Private Client Group at U.S. Bank.
The initial enthusiasm of markets for Trump’s promises of tax cuts, stimulus spending, and deregulation hit its first blip during the president’s inauguration speech as he foreshadowed a protectionist trade policy. Now, according to the Wall Street Journal, the Dow Jones is on its longest losing streak since 2011.
“There’s some disappointment about the administration’s failure on health care and what that might mean for the rest of their agenda,” said Russ Koesterich, a co-portfolio manager of BlackRock’s Global Allocation Fund.
[…] The CBOE Volatility Index, known as Wall Street’s “fear gauge,” rose 1.5% to 13.16, after earlier touching its highest levels yet this year.
Much of the selloff is happening to companies that were expected to do well in the Trump era. “The Dow Jones, Nasdaq and S&P 500 all sunk roughly 1 percentage point upon the start of trading, regaining some ground by noon,” reports The Hill. “Banks, mining and oil companies are on track for losses despite being some of the best-performing stocks immediately after the election.” (Emphasis mine)
The volatile market may add to uncertainty about jobs data over the next few months as thousands of retail stores are set to close around the country, potentially turning hundreds of American malls into empty shells. Sears and Kmart are on the verge of going out of business altogether. Combined with further disappointments from Washington, a genuine bear market could develop.
Are we tired of winning yet? We were supposed to be tired of all the winning by now.
Featured image via public domain