Vigorous trading is back now on the 2^nd trading day after the holiday with nearly 8 billion shares changing hands with the Dow nudging down a very modest 20 points as investors continue to lose confidence in the Trump agenda.  But this loss of political confidence is more than compensated by a gain in economic confidence as the VIX registers it lowest levels in two decades.  The banks got hit today on concerns that deregulation will not happen, at least not for a while.  Giants JPMorgan and BofA both warned of lower revenues due to lower volatility (aka lower trading.)

BANKS | Wed May 31, 2017 | 4:18pm EDT

Wall Street little changed as financials drop, defensive stocks gain

By Chuck Mikolajczak | NEW YORK

DJ: 21,008.65  -20.82     NAS: 6,198.52  -4.67       S&P: 2,411.80  -1.11      5/31

(Reuters)  U.S. stocks were little changed on Wednesday as financials dropped after JPMorgan and Bank of America warned of revenue weakness, offsetting gains in defensive plays.  JPMorgan (JPM.N) blamed lower volatility for a 15 percent decline in trading revenue in the current quarter compared with last year, while Bank of America (BAC.N) said trading revenue in the second quarter was on track to be 10 to 12 percent lower than last year.

Financials .SPSY rallied more than 20 percent in the wake of the U.S. presidential election on hopes of fiscal stimulus and deregulation under President Donald Trump, but they have struggled in recent weeks. The sector is now down 0.3 percent on the year.

"All the things that Trump told us were going to happen, which was infrastructure spend, deregulation, tax reform, people don’t believe any of those will happen, certainly the magnitude and with the speed the market had originally priced in," said Ernesto Ramos, head of equities at BMO Global Asset Management in Chicago.

"That is why you’ve seen a lot of the move back, specifically banks."

Measures of market volatility are at rock-bottom, hitting trading desks at big banks. The U.S. stock market's main gauge of investor anxiety .VIX closed at its lowest level in over two decades on May 8 and has not topped its long-term average of 20 since November. It did, however, hit a seven-day high of 11.30 on Wednesday.

JPMorgan (JPM.N) shares lost 2.1 percent while Bank of America (BAC.N) was down 1.9 percent as the two biggest weights on the S&P 500. Goldman Sachs (GS.N) fell 3.3 percent, the biggest drag on the Dow.

Defensive plays such as utilities .SPLRCU, up 0.46 percent and telecoms .SPLRCL, up 0.35 percent, were the bright spots as enthusiasm fades for sectors that would benefit from Trump policies.

Energy stocks .SPNY, down 0.4 percent, also lost ground. Oil prices touched a three-week low as rising output from Nigeria and Libya fueled concerns that OPEC-led output cuts are being undermined. U.S. crude CLcv1 settled down 2.7 percent at $48.32 a barrel and Brent settled 3 percent lower at $50.1.

The Dow Jones Industrial Average .DJI fell 20.82 points, or 0.1 percent, to 21,008.65, the S&P 500 .SPX lost 1.1 points, or 0.05 percent, to 2,411.81 and the Nasdaq Composite.IXIC dropped 4.67 points, or 0.08 percent, to 6,198.52.

Shares of Michael Kors (KORS.N) plunged 8.5 percent to $33.18. The luxury fashion retailer gave a bleak full-year forecast and said it would shut more than 100 full-price retail stores in the next two years.

Mallinckrodt (MNK.N) closed down 1.2 percent at $43.13 after sources said the drugmaker is exploring a sale of its generic drug unit for as much as $2 billion.

Analog Devices (ADI.O) rose 1.1 percent to $85.76 after the chipmaker's quarterly results came in above expectations.

Advancing issues outnumbered declining ones on the NYSE by a 1.01-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 82 new highs and 70 new lows.

About 7.85 billion shares changed hands in U.S. exchanges, above the 6.72 billion daily average over the last 20 sessions.