Worst day of year for stocks
U.S. stocks take their biggest loss in five months as a healthcare bill backed by President Trump runs into trouble.
U.S. stocks took their biggest loss in five months Tuesday as a healthcare bill backed by President Trump ran into trouble in Congress, which raised some questions about his agenda of faster economic growth spurred by lower taxes and cuts in regulations.
Banks plunged as bond yields continued to fall. Transportation companies dropped, as did materials firms. The dollar weakened. Small-company stocks, which stand to benefit the most from Trump’s policy proposals of lower taxes and looser regulations, fell more than the rest of the market.
“President Trump promised that this healthcare bill would be signed, sealed, delivered within the first couple of weeks of him taking office,” said Jack Ablin, chief investment officer for BMO Capital Markets. “All this is doing is pushing the rest of the agenda out.”
The Standard & Poor’s 500 index tumbled, notching its biggest drop since Oct. 11.
Stocks have fallen four days in a row, though the previous losses were small. Tuesday’s losses were a reversal of the patterns that have endured since Trump was elected in November, but overall stocks are still sharply higher since then.
On Thursday, the House of Representatives is scheduled to vote on the GOPbacked American Health Care Act, and it’s not clear if the House or the Senate will approve the bill. The administration hopes to get a major tax reform package to Congress by August.
Banks had their worst day in nine months as bond prices rose. The yield on the 10-year Treasury note declined to 2.42% from 2.46%. Bank of America sank 5.8% to $23.02. KeyCorp slid 6.5%, to $16.90, the biggest loss in the S&P 500. JPMorgan Chase fell 2.9% to $87.39. Still, banks have done far better than the rest of the market since the election.
Among transportation companies, United Continental fell 3.3% to $65.28 and railroad operator CSX fell 2.7% to $45.62. Hertz Global skidded 8.7% to $19.40. Companies that make steel, chemicals and other basic materials also slid. AK Steel plunged 10.4% to $7.51 and U.S. Steel sank 9% to $33.76.
Copper dropped 5 cents to $2.62 a pound. The metal’s price tends to rise when investors are more optimistic about the economy.
Big-dividend companies, especially utilities, did well. Some household goods makers also rose.
Kate Warne, an investment strategist for Edward Jones, said investors are taking some profits after the market’s long post-election win streak, but she noted that Wall Street is especially eager for the administration’s tax reform proposals.
Food companies fell after General Mills posted a better-than-expected profit but weaker sales. It faces more competitive pricing and a market that has been shifting demand from processed foods. Its stock slipped 0.8% to $59.76. Campbell Soup slid 3.2% to $57.09.
Benchmark U.S. crude fell 1.8% to $47.34 a barrel. Brent crude fell 1.3% to $50.96 a barrel. Wholesale gasoline fell 1 cent to $1.61 a gallon. Heating oil fell 1 cent to $1.50 a gallon. Natural gas rose 5 cents to $3.09 per 1,000 cubic feet.
Gold jumped $12.50, or 1%, to $1,246.50 an ounce. Silver rose 15 cents to $17.58 an ounce. The dollar fell to 111.90 yen from 112.58 yen. The euro rose to $1.0804 from $1.0733.