Stocks Sink on Washington Worries 03/27 15:56
Worries that Washington may not be able to help businesses as much as once
thought knocked stock indexes down hard early Monday, but they clawed back most
of their losses and ended the day mixed.
NEW YORK (AP) -- Worries that Washington may not be able to help businesses
as much as once thought knocked stock indexes down hard early Monday, but they
clawed back most of their losses and ended the day mixed.
The Standard & Poor's 500 index fell 2.39 points, or 0.1 percent, to
2,341.59 for its seventh drop in the last eight days. The Dow Jones industrial
average sank 45.74, or 0.2 percent, to 20,550.98, while the Nasdaq composite
index rose 11.64, or 0.2 percent, to 5,840.37.
When trading opened for the day, it looked as if losses would be much worse.
The S&P 500 sank from the start and was down as much as 0.9 percent.
The weakness followed last week's failure by Republicans to repeal the
Affordable Care Act, something they've been pledging to do for years, which
raised doubts that Washington can push through promises to help businesses.
Investors have been anticipating that President Donald Trump and the
Republican-led Congress will cut taxes, loosen regulations for companies and
institute other corporate-friendly policies.
Indexes recovered most of their losses in the afternoon, largely thanks to
gains in hospital and other health care stocks. Tax cuts, deregulation and
other business-friendly moves could still happen, but even if they don't, the
stock market has several pillars of support, said John Manley, chief equity
strategist at Wells Fargo Funds Management.
"Trump lucked out when he got elected president, because it was just as
earnings were coming out of a two-year slumber," he said. "I think it's been as
much, if not more, about earnings as it's been him" behind the 9.4 percent rise
for the S&P 500 since Election Day.
An improving economy is translating into bigger profits for businesses,
which are set to report their first-quarter results in the coming weeks. The
Federal Reserve, meanwhile, is moving very slowly in raising interest rates and
is loath to apply the brakes to the economy too quickly.
"Investors have to acknowledge that a 5 percent correction can happen at any
time, and the fact that we haven't had a 1 percent down day for so long is
extraordinary," Manley said. "But the things that are usually responsible for a
major market decline just don't seem to be in place."
The S&P 500 has lost 1 percent in a day just once since mid-October.
Interest rates fell Monday. The yield on the 10-year Treasury dropped to
2.37 percent from 2.41 percent late Friday. Just a couple weeks ago, it was
above 2.60 percent.
Bank stocks have tracked the movements of Treasury yields recently, because
higher interest rates would allow them to charge more for loans and reap bigger
profits. Investors also expected financial companies to be some of the biggest
beneficiaries of easier regulations with a Republican-led White House.
Financial stocks in the S&P 500 dropped 0.5 percent, one of the larger
losses among the 11 sectors that make up the index. Morgan Stanley fell 88
cents, or 2.1 percent, to $41.58, and Capital One Financial lost $1.67, or 2
percent, to $82.13.
Hospital stocks were among the strongest performers. The Republican health
care plan would have resulted in 24 million additional uninsured people in a
decade, according to a tally by the Congressional Budget Office. And hospitals
take care of patients, whether they're insured or not.
HCA Holdings jumped $4.45, or 5.2 percent, to $90.49 for the biggest gain in
the S&P 500. Universal Health Services rose $4.08, or 3.3 percent, to $125.97.
Also demonstrating the swing from nervousness in the morning to a more
measured mood in the afternoon was the VIX index, which tracks how much traders
are paying to protect against upcoming drops in the S&P 500.
Early Monday, the VIX jumped nearly 17 percent and was close to its highest
level since mid-November. It calmed through the day and was down by the
The price of gold rose $7.20 to settle at $1,255.70 an ounce. Silver rose 36
cents to $18.11 per ounce. Copper was close to flat at $2.63 per pound.
Benchmark U.S. crude fell 24 cents to settle at $47.73 per barrel. Brent
crude, used to price international oils, fell 5 cents to $50.57 a barrel.
Natural gas fell 2 cents to $3.05 per 1,000 cubic feet, wholesale gasoline
rose a penny to $1.62 per gallon and heating oil was close to flat at $1.50 per
The dollar fell to 110.57 Japanese yen from 110.80 late Friday. The euro
rose to $1.0868 from $1.0808, and the British pound rose to $1.2566 from
Stocks were weak around the world. In Asia, Japan's Nikkei 225 index dropped
1.4 percent, South Korea's Kospi index lost 0.6 percent and the Hang Seng in
Hong Kong fell 0.7 percent. In Europe, the German DAX lost 0.6 percent, the
French CAC 40 fell 0.1 percent and the FTSE 100 in London dropped 0.6 percent.