What to watch

Market volatility as Wall Street reassesses

Volatility could reign in the U.S. stock market in the coming months as Wall Street pivots on its assessment of President Trump’s priorities.

The Dow Jones industrial average fell 0.2%, marking its first eight-session losing streak since July 22-Aug. 2, 2011, when the debt ceiling fight erupted.

The market retreat comes after Republican leaders failed to rally support for their Obamacare replacement bill and pulled it Friday. But continued insurance coverage of millions of Americans under Obamacare buoyed health care stocks, with the sector — one of 11 tracked by S&P — gaining 0.36% Monday. The S&P 500 ended the day down 0.1%.

“This past week we found out that the world is still a dangerous place, and getting deals done in Washington is tougher than most boardrooms,” Steven DeSanctis, equity strategist of Jefferies, wrote in an investor note. “With that, volatility rose a bit, but expect more over coming months.”

Despite the health care bill’s outcome, analysts still expect Trump and Republican lawmakers to push on in their quest to cut taxes and overhaul the U.S. tax system. Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a note Monday that he continues to expect a $2 trillion package of tax cuts by early next year: “Even complete legislative gridlock wouldn’t necessarily be a disaster, however, particularly not when there is evidence of a very strong pick-up in global economic growth.”