The News Herald (Willoughby, OH)
Banks nosedive as health care stumbles
U.S. stocks took their biggest loss in five months as a health care bill backed by Trump ran into trouble.
NEW YORK >> U.S. stocks took their biggest loss in five months Tuesday as a health care bill backed by President Donald Trump ran into trouble in Congress, which raised some questions about his agenda of faster economic growth spurred on by lower taxes and cuts in regulations.
Banks plunged as bond yields continued to fall, which will mean lower interest rates on loans. Transportation companies including airlines, railroads and rental car companies dropped, and so did materials companies like steel and chemicals makers. The dollar weakened. Smallcompany 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 health care 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 29.45 points, or 1.1 percent, to 2,344.02. That was its biggest drop since Oct. 11. The Dow Jones industrial average fell 237.85 points, or 1.1 percent, to 20,668.01.
The Nasdaq composite surrendered 107.70 points, or 1.8 percent, to 5,793.83. The Russell 2000 index of small-company stocks plunged 37.55 points, or 2.7 percent, to 1,346.55. Fourfifths of the stocks on the New York Stock Exchange fell.
Stocks have fallen for 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 Republican-backed American Health Care Act, and despite support from the president on Tuesday, 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, and a big infrastructure spending proposal may follow next year.
Banks had their worst day in nine months as bond prices rose. The yield on the 10-year Treasury note declined to 2.42 percent from 2.46 percent. Bank of America fell $1.42, or 5.8 percent, to $23.02. KeyCorp sank $1.18, or 6.5 percent, to $16.90, the biggest loss in the S&P 500. JPMorgan Chase gave up $2.64, or 2.9 percent, to $87.39. Still, banks have done far better than the rest of the market since the election.
Among transportation companies, United Continental lost $2.21, or 3.3 percent, to $65.28 and railroad operator CSX declined $1.26, or 2.7 percent, to $45.62. Hertz Global skidded $1.86, or 8.7 percent, to $19.40. Companies that make steel, chemicals, and other basic materials also slid. AK Steel plunged 86 cents, or 10.4 percent, to $7.51 and U.S. Steel lost $3.34, or 9 percent, to $33.76.