Stocks sink as border angst escalates
Dow suffers worst loss of ’17 amid immigration uproar
The “Trump Trade” might not be invincible after all.
On Monday, Wall Street started to account for political and policy risk for the first time in the Trump era, with the Dow suffering its biggest point drop since the election amid fallout stemming from President Trump’s order to clamp down on immigration from seven Middle East countries with Muslim-majority populations.
“This is not a positive story for the markets,” says Gregory Valliere, chief global strategist at Horizon Investments.
Since Trump’s Nov. 8 election, Wall Street has been driving stocks higher on Trump’s business-focused agenda, which include cutting corporate taxes, slashing regulations and ramping up fiscal spending.
But Monday’s trading action signals that investors are concerned about some of Trump’s other policies, which include his views on immigration and a protectionist stance on global trade.
The Dow Jones industrial average, which was down nearly 224 points at its session low Monday, closed down 122.65 points, or 0.6%, to 19,971.13. It was the bluechip stock gauge’s worst point loss of 2017 and its biggest since a 200.38-point fall on Oct. 11.
“This is not a positive story for the markets.” Gregory Valliere, Horizon Investments
Other major U.S. stock indexes also fell but finished the day off their lows. The Standard & Poor’s 500 fell 0.6% to 2280.90 and the Nasdaq lost 0.8%.
The lousy start to the week comes after the Dow topped 20,000 for the first time last Wednesday. The sell-off also occurred ahead of a busy week of earnings results from corporate America, the Federal Reserve’s first policy meeting of 2017 and the final look at the employment market in 2016 when the December jobs report is released Friday.
Much of the angst on Wall Street comes from Trump’s executive order signed Friday that placed a 90-day ban on travel to the U.S. by citizens of Iraq, Syria, Iran, Sudan, Libya, Somalia and Yemen. It also imposed a 120-day suspension of the U.S. refugee program and blocked Syrians from entry indefinitely. The move triggered protests and confusion at U.S. airports over the weekend.
Trump’s travel ban also caused a sharp spike in market uncertainty, as investors tried to handicap the fallout of a less-open U.S. border on key sectors of the economy, such as technology.
“We are not saying all this divisiveness will cause problems for the market; we are just saying it is something to watch,” says Gary Kaltbaum, president of Kaltbaum Capital Management.
In Europe, Germany’s DAX fell 1.1%, while the CAC 40 in France shed 1.1%.