Dow, S&P 500 aim for worst day in 3 ½ months as Trump orders weigh

Dow, S&P 500 aim for worst day in 3 ½ months as Trump orders weigh
January 30 18:09 2017 Print This Article

The Dow and the S&P 500 index on Monday were on track to register their worst daily loss since mid-October as investors grappled with the latest policy decisions by President Donald Trump. Wall Street also looked ahead to a heavy week of economic data, corporate earnings and the latest meeting by the Federal Reserve set to begin Tuesday.

The Dow Jones Industrial Average DJIA, -0.89% tumbled 164 points, or 0.8%, to 19,930, dropping below the psychologically important 20,000 level and putting the blue-chip gauge on track to mark its worst daily drop since Oct. 11, according to FactSet data.

The S&P 500 index SPX, -0.94% shed 20 points, or 0.9%, to 2,274, also on pace for its sharpest daily drop since Oct. 11. The day’s losses were broad, with all of the S&P 500’s 11 primary sectors in negative territory.

The Nasdaq Composite Index COMP, -1.12% gave up 59 points to 5,601, a drop of 1.1%. The CBOE Volatility index VIX, +17.20% a measure of investor anxiety, surged 17% in its biggest one-day pop in about five months, though at 12.35 it remains well below its long-term average of 20.

While stocks reacted favorably to Trump’s election in November, with major indexes hitting a series of records as investors bet he would push for lower taxes and deregulation, the first week of his administration was marked by confusion and controversy. Tensions have been high between the U.S. and Mexico, while a public outcry that occurred over a travel ban this weekend sowed further doubts among some analysts that lack of equity volatility could continue.

Read: Wall Street’s Trump optimism comes with heavy dose of uncertainty

Some investors speculated on what weekend moves by the Trump administration to ban immigrants from several predominantly Muslim countries could have on businesses world-wide. Others said it was another reason not to expect the year to go smoothly.

“While we continue to think a Trump victory likely means higher U.S. growth in 2017 than we would have expected three or six months ago, we still think volatility will be a feature of the year,” wrote Deutsche Bank analysts Jim Reid and Craig Nichol, in a note to clients on Monday. “It just seems that there are too many uncertainties, unknowns and major policy changes attached to a Trump presidency for it to be a smooth year.”

The biggest declining sector of the day was energy, which shed 1.7%. Tech was also lower, falling by about 1.3%.

Read: Pro-immigrant protests continue at airports, cities around U.S.

Read: Does Trump rally face ‘one last meltup’ after Dow 20,000?

Fed meeting, data: In the latest economic data, consumer spending rose 0.5% last month, matching the estimate of economists polled by MarketWatch. That is the biggest increase in spending in December since the last month of 2009. The same report showed a pick up in a yearly comparison of inflation, to its highest since late in 2014. Separately, pending home sales rose 1.6% in December.

Read: Jobs report to give clue on early days of Trump White House

The Federal Open Market Committee’s two-day meeting kicks off Tuesday, with economists widely predicting the central bank will hold pat and leave interest rates unchanged. That means investors will likely focus on “any new guidance on the ‘balance of risks’ statement with respect to policy confidence about further stimulus withdrawal,” said Lena Komileva, chief economist at G+Economics, in a note to clients.

Stocks to watch: The coming week will feature reports from one-fifth of the S&P 500 index, plus five Dow components. Crucial for the consumer-reliant technology sector will be Apple Inc. AAPL, -0.62% on Tuesday and Facebook Inc. FB, -1.37% on Wednesday, while Inc. AMZN, -1.10% reports Thursday.

Read: Outlooks for the Age of Trump are top focus of the earnings season

Meanwhile, executives from big technology companies such as Alphabet Inc.’s Google Inc. GOOG, -2.50% Facebook and Microsoft Corp. MSFT, -1.16% were among those who jumped to criticize Trump’s temporary immigration ban.

Delta Air Lines Inc. DAL, -3.97% said domestic flights were resuming after a computer glitch caused cancellations on Sunday. Shares fell 3.4%. The sector was also pressured by Trump’s executive order to restrict immigration as it led to protests at airports across the country. The US Global Jets ETF JETS, -2.43% fell 2.6%.

Tempur Sealy TPX, -31.98% sank 27% after Mattress Firm terminated contracts with the company.

Other markets: The FTSE 100 Index UKX, -0.92% and Stoxx Europe 600SXXP, -1.05% logged losses of 0.7% and 0.6%, respectively, amid negative reaction to Trump’s immigration ban. In Asia, the Nikkei 225 index NIK, -0.51% closed down 0.5%, largely due to yen strength. Most Asia markets were closed for the Lunar New Year holiday.

Oil prices CLH7, -0.90% fell 0.7%.

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Mark Winterberg
Mark Winterberg

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