Almost immediately after the opening bell, US stocks fell this morning. Many speculate this is largely the result of the Republican failure to repeal (and replace) Obamacare which sparked great concern over the Trump administration’s ability to actually pass business-friendly initiatives (as Trump swore he would do during his campaign).
More specifically, both the the Standard & Poors index and the Dow Jones Industrial Average fell 0.7 percent to 2,327 and 20,459, respectively. This is the lowest mark in six weeks, and the Dow is now on track to reach its longest losing streak in at least the last six years.
But Monday’s US stocks decline also appears to be just part of a global trend: pan-European Euro Stoxx 600 index fell 0.8 percent and Japan’s benchmark index—the Nikkei 225—fell a whopping 1.4 percent.
According to First Standard Financial chief market economist Peter Cardillo, “The markets around the globe are falling as a rethinking of the ‘Trump Trade’ begins to focus on reality. While we don’t expect a full-blown correction to commence at this time, we do see rising negative sentiment replacing the ‘Hope Trade’.”
Furthermore, IG market analyst Joshua Mahony adds, “The problem for markets is two-fold, with the inability to pass the health care reforms meaning any tax cuts will be diminished, while markets are now left wondering whether the president’s lack of support in Congress will make his tax cuts hard to pass in any form.”
While Trump has wasted no time setting up deals after taking office, the Obamacare repeal bill—which was supposed to overhaul (and repair) the Affordable Care Act (aka “Obamacare”)—was his first major move. But this was a massive misstep and now it is raising significant questions over the entire administration’s ability to support and legislate any momentum-earning agenda.
Finally, Société Générale global head of economics, Michala Marcussen, notes, “Financial markets seem increasingly skeptical that Trump will be able to deliver on the many promises that fueled the S&P 500 [to] a peak of close to 2,400 in early March. This will place the emphasis on the economic data, at least until the next debate in Washington is more advanced.”