Wall Street suffers worst day this year

Posted March 25, 2017

The broader Financial Select Sector SPDR (XLF) decreased 2.9% and was the biggest decliner among the S&P 500 sectors. Investors were anticipating the central bank to be more hawkish on its rate hike outlook.

Banks benefit from higher interest rates, and their stocks are sensitive to changes in expectations of how quickly the Fed will change rates. This central bank raised key interest rate for the first time this year.

US 10-year Treasury yields fell to their lowest level since the end of February and the gap between USA and German 10-year government borrowing costs hit its narrowest since November.

To be sure, those statistics may offer no solace (and no guarantee of future gains) to investors fretting that the wheels may be coming off the equity train that has been powered by promises of fiscal stimulus from President Donald Trump.

Trump and Republican lawmakers appeared to be losing the support they need for controversial healthcare legislation scheduled for a vote in the House of Representatives on Thursday. The small-cap Russell 2000 index, in the interim, wiped out all of its year-to-date gains.

The Dow Jones Industrial Average dropped 6.71 points, or 0.03%, to settle at 20,661.30. The tech-laden Nasdaq Composite Index closed at 5,793.83, declining 1.8%.

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"Combine that with [The Wall Street Journal], a notably right-leaning publication, claiming that if Trump doesn't "show more respect for the truth" then "most Americans may conclude he's a fake president" and the optimism that caused investors to flock to the major indices has been seriously undermined by, well, Trump himself", Connor Campbell, financial analyst at Spreadex, said in a note. Inventors were concerned that the efforts to pass a Republican healthcare bill through the Congress will delay President Trump's pro-economic policies including tax cuts and passing an infrastructure spending bill.

But she added that Wall Street is especially eager for the administration's tax reform proposals.

The market has also been treading water as investors fret about elevated valuations following the election. JPMorgan Chase shares dipped 2.9 percent. Nasdaq recorded 78 new highs and 79 new lows.

Advancing issues outnumbered declining ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.33-to-1 ratio favored decliners.

The S&P 500 index showed 10 new 52-week highs and 14 new lows, while the Nasdaq recorded 14 new highs and 69 new lows.

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