The three-month rally in stock markets ran out of a little steam on Monday on worries that the Trump White House may not be able to push through as many changes to business regulations as once thought.
Monday was the first trading day since word emerged late Friday that the Republican-controlled U.S. Congress had failed to pass a bill to nix Obamacare, the divisive health care plan that Trump had promised to replace and repeal.
While not devastating, the Republican’s lack of ability to get through their bill despite having control of the White House, the Senate and the House of Representatives was a setback for the new president. And that pessimism spilled into stocks, as U.S. markets were all broadly lower.
The Dow Jones Industrial Average lost 70 points to 20,534 in the afternoon, after earlier having been off by much more. The S&P 500 was also lower, down five points.
Banks and small-company stocks, which have outperformed the rest of the market since the election on hopes that Trump would be able to push through aggressive tax reforms, went into reverse.
Goldman Sachs gave up 1.6 per cent Monday. Gold, traditionally a safe haven during times of uncertainty, rallied.
“The prevailing view is that it may be difficult to get any of the changes done,” said Brian Kleinhanzl, an analyst covering banks at Keefe, Bruyette & Woods in New York. “The potential to get tax reform done sooner is positive. But … you might have to make it less impactful. You might not get as low a rate as you wanted.”
The U.S. dollar slid to its lowest level since election day as fears grew that a planned fiscal spending boost might also never materialize. The greenback was largely unchanged at 74.80 US cents for a Canadian dollar, but fared much worse against a basket of six other major currencies.
Oil lost 55 cents to change hands at $47.42 US per barrel.
