Wall St. falters as Senate delays health vote
DJ: 21,310.66 -98.89 NAS: 6,146.62
-100.53 S&P: 2,419.38
-19.69 6/27
(Reuters) The tech-heavy Nasdaq led a broad Wall Street
decline on Tuesday with stocks falling more sharply after a healthcare bill was
delayed in the U.S. Senate, raising fresh questions about President Trump's domestic
agenda. The benchmark
S&P 500 posted its biggest one-day drop in about six weeks and closed at
its lowest point since May 31.
Major indexes extended losses after
U.S. Senate Republican leader Mitch McConnell decided to put off a planned vote
on a bill to dismantle the Affordable Care Act until after the Senate's July 4
recess.
The
healthcare legislation,
which has encountered resistance from several Republicans, is the first plank of Trump's
domestic policy agenda, with investors eager for him to move onto his
other plans including tax cuts, infrastructure spending and deregulation.
Promises
for such domestic polices helped fuel a 13.1-percent rise for the benchmark
S&P 500 since Trump's Nov. 8 election.
“The
market likes certainty, and now
there’s uncertainty," said Peter Costa, president of trading firm
Empire Executions in New York. "What is this going to look like when this
gets out of the next iteration? That uncertainty I think is just having people
pause a little bit."
"I
also think that when the market gets to certain levels, any type of
uncertainty, especially in anything that has to do with the administration,
will have an adverse effect," Costa said.
The Dow Jones Industrial Average .DJI fell 98.89
points, or 0.46 percent, to 21,310.66, the S&P 500 .SPX lost 19.69
points, or 0.81 percent, to 2,419.38 and the Nasdaq Composite .IXIC dropped
100.53 points, or 1.61 percent, to 6,146.62.
Big
tech names weighed most heavily on the S&P 500. Google parent Alphabet (GOOGL.O) fell 2.5 percent
after EU antitrust
regulators hit the tech giant with a record $2.7-billion fine.
The
Nasdaq had its worst day since a tech-led slide on June 9 raised questions
about the sector.
On
Tuesday, the tech sector .SPLRCT pulled back 1.7 percent. It remains the
best-performing major group this year.
"There
is some thinking that they ran up too quickly, and if there’s an excuse to sell
then we get some traders come in and sell into that weakness," said Bucky
Hellwig, senior vice president at BB&T Wealth Management in Birmingham,
Alabama.
The
healthcare sector .SPXHC weakened after news of the vote delay, and ended down
0.9 percent.
Financials
.SPSY were the only sector to end in positive territory, rising 0.5 percent.
Data
showed consumer confidence
for June rose more than expected, which could bolster the Fed's case for
another rate hike this year.
Philadelphia
Fed President Patrick Harker said the Fed rightly plans to raise rates once
more this year, given recent inflation weakness is likely temporary.
U.S. Federal Reserve Chair Janet Yellen
said she does not believe there will be another financial crisis for at least
as long as she lives, thanks largely to reforms of the banking system since the
2007-09 crash.
Investors
are gearing up for second-quarter corporate earnings season after a strong
first quarter, with the S&P 500 trading at nearly 18 times forward earnings
estimates, well above its long-term average of 15 times.
"On
an earnings basis, the market appears to be fully valued and we need to see
fiscal policy, tax and regulatory reform, to drive GDP growth and then stock
prices," said Ernie Cecilia, chief investment officer of Bryn Mawr Trust
in Bryn Mawr, Pennsylvania.
Declining
issues outnumbered advancing ones on the NYSE by a 1.89-to-1 ratio; on Nasdaq,
a 1.98-to-1 ratio favored decliners.
Note:
No volume data published to day but, per BATS, volume was 7.03 billion.
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