Stocks dip over Washington news
Investors’ nervousness revealed by VIX index rise and fall; health care companies see Monday boost.
Worries that Washington may not be able to help businesses as much as once thought knocked stock indexes down hard early Monday, but they clawed back most of their losses and ended the day mixed.
Investors have been anticipating that President Donald Trump and the Republican-led Congress will cut taxes, loosen regulations for companies and institute other corporate-friendly policies.
Indexes recovered most of their early losses thanks to gains in hospital and other health care stocks. Tax cuts, deregulation and other business-friendly moves could still happen, but even if they don’t, the stock market has several pillars of support, said John Manley, chief equity strategist at Wells Fargo Funds Management.
“Trump lucked out when he got elected president, because it was just as earnings were coming out of a two-year slumber,” he said. “I think it’s been as much, if not more, about earnings as it’s been him” behind the 9.4 percent rise for the S&P 500 since Election Day, Manley said.
An improving economy is translating into bigger profits for businesses, which are set to report their first-quarter results in the coming weeks. The Federal Reserve, meanwhile, is moving very slowly in raising interest rates and is loath to apply the brakes to the economy too quickly.
“Investors have to acknowledge that a 5 percent correction can happen at any time, and the fact that we haven’t had a 1 percent down day for so long is extraordinary,” Manley said. The S&P 500 has lost 1 percent in a day just once since mid-October.
Interest rates fell Monday. The yield on the 10-year Treasury dropped to 2.37 percent from 2.41 percent Friday. Just a couple weeks ago, it was above 2.60 percent.
Early Monday, the VIX jumped nearly 17 percent and was close to its highest level since mid-November. It calmed through the day and was down by the afternoon.
Hospital stocks were among the strongest performers. Hospitals take care of patients whether or not they’re insured.
HCA Holdings jumped $4.45, or 5.2 percent, to $90.49 for the biggest gain in the S&P 500. Universal Health Services rose $4.08, or 3.3 percent, to $125.97.
Benchmark U.S. crude fell 24 cents to settle at $47.73 per barrel. Brent crude, used to price international oils, fell 5 cents to $50.57 a barrel. Natural gas fell 2 cents to $3.05 per 1,000 cubic feet, wholesale gasoline rose a penny to $1.62 per gallon and heating oil was close to flat at $1.50 per gallon.