Global stocks sink as ‘Trump trade’ flips into reverse

AP

Stocks around the world sank on Monday on worries that the Trump White House may not be able to help businesses as much as once thought. Many of the trends that have been in place since Election Day went into sharp reverse: The dollar’s value sank against other currencies, as did bank stocks, while prices jumped for Treasury bonds.
The Standard & Poor’s 500 index fell 17 points, or 0.7 percent, to 2,326, as of 9:35 a.m. Eastern time. The Dow Jones industrial average lost 157, or 0.8 percent, to 20,438. The Nasdaq composite dropped 53, or 0.9 percent, to 5,776.
Small-company stocks, which have outpaced the rest of the market since the election, fell even more. The Russell 2000 index sank 18 points, or 1.3 percent, to 1,336.
The stock market had been on a nearly nonstop rip higher since Election Day on the belief that President Donald Trump and a Republican-led Congress will cut income taxes, loosen regulations for companies and institute other business-friendly policies. Besides stronger economic growth, investors were also predicting higher inflation would be on the way.
But last week’s failure by Republicans to fulfill a pledge they’ve been making for years, to repeal the Affordable Care Act, raises doubts that Washington can push through other promises. The House on Friday pulled its bill to revamp the country’s health care system, when it was clear that it didn’t have enough votes to pass.
The dollar fell against most of its major rivals, including the Japanese yen, euro and British pound. The ICE US Dollar index, which measures the US currency’s value against six others, has given up nearly all of its big gains since Election Day. The yield on the 10-year Treasury fell to 2.35 percent from 2.41 percent late Friday. That’s close to its lowest level in a month. It was above 2.60 percent just a couple weeks ago. Two- and 30-year Treasury yields also sank. 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. Financial stocks in the S&P 500 dropped 2 percent, by far the largest loss among the 11 sectors that make up the index.
The VIX index measures the market’s nervousness by looking at how much traders are paying to protect against upcoming drops in the S&P 500. By that measure, investors are feeling the most jittery since mid-November, shortly after Election Day.