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Wall Street sinks on fears of delays to Trump tax cuts

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Reuters

Bank of America slumped 5.77 per cent, the biggest drag on the S&P 500, while a 3.72-per cent drop in Goldman Sachs pulled the Dow lower.

Early stock market weakness quickly abated as the market rebounded heading into midday trading. Expectations of those tax cuts are a major reason for the 10-per cent surge in the S&P 500 since Trump's election.

At 9:38 a.m. ET (1338 GMT) the Dow Jones Industrial Average .DJI was down 23.89 points, or 0.12 percent, at 20,644.12, the S&P 500 .SPX was down 0.11 points, or 0.00 percent, at 2,343.91.

As everyone tries to understand why the stock market suffered its worst session in six months, down more than 1% for the first time since October 11th (finally, some rule #1 in terms of mean reversion ... which means heightened volatility ahead so fasten your seatbelts), my recommendation is to stop wasting your time trying to explain something that is as simple as an asset class that is priced for perfection at some point realizes that the world is not a ideal place. The Nasdaq composite rose 27.82 points, or 0.5 per cent, to 5,821.64. The CBOE Volatility index, Wall Street's "fear gauge", jumped 10 percent.

DIDN'T DO IT: Shoe and athletic apparel giant Nike dropped as Wall Street wasn't impressed with its third-quarter results, which included slightly disappointing sales, or its forecasts for the current period.

The S&P 500 declined the most in one session in five months and closed 29 points lower at 2,344.

"The market is starting to get a little fed up with the lack of progress in health care because everything else is being put on the back burner", said RJ Grant, head of trading at Keefe, Bruyette & Woods in NY.

Some investment advisors blamed Tuesday's slide on the hostile response to the GOP healthcare reform bill - a sign Trump's agenda could continue to face problems on Capitol Hill. However, difficulties in passing the healthcare bill dented the market sentiment and resulted in a pullback.

The financial index dropped 2 per cent and was on track for the biggest daily percentage fall since January 17.

The financial sector has been the best performing of the 11 major S&P sectors since Trump's election, up 18 percent.

But investors have grown concerned about elevated valuations.

Shares of FedEx Corp (FDX.N) fell 3% in extended trade after the delivery company's quarterly report disappointed investors.

Declining issues outnumbered advancers on the NYSE by 1,598 to 976.

Others suggest the market could simply be reaching its limit, with disparities between stock values and corporate earnings nearing record highs.

About 8.3 billion shares changed hands in USA exchanges, compared with the 7.1 billion daily average over the last 20 sessions.

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