Slump in financials sends Wall St. lower | Reuters

By Chuck Mikolajczak U.S.

Reuters March 21, 2017 22:15:06 IST
Slump in financials sends Wall St. lower
| Reuters

Slump in financials sends Wall St lower
 Reuters

By Chuck Mikolajczak

U.S. stocks gave up early gains and turned sharply lower on Tuesday, led by a fall in financial shares, as investors began to question how quickly the Trump administration can implement pro-growth policies.The financial index .SPSY dropped 2 percent and was on track for the biggest daily percentage fall since Jan. 17. Bank of America (BAC.N), off 4.6 percent, was the biggest drag on the S&P 500 while a 2.3 percent drop in Goldman Sachs (GS.N) pulled the Dow lower.Financials have weakened in tandem with a pullback in bond yields following the Federal Reserve's policy announcement last week. The central bank raised rates by 25 basis points but signaled it would remain on a gradual pace of hike. "With the financials, a lot of that has to do with the yield on the 10-year that has moved its way back to the middle of the range," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "All the way down, financials have been getting tagged with that."

Benchmark 10-year U.S. Treasuries US10YT=RR were last up 9/32 in price to yield 2.441 percent, the lowest yield since March 1.Sectors expected to benefit from policies of lower taxes and fiscal stimulus were weaker as investors grew leery those plans may take longer to implement if the Trump administration has to expend more time and energy to get a healthcare plan passed. The Russell 2000 index of smallcap stocks was down 1.7 percent, on pace for its worst day since Oct. 11.

"Republicans should have prioritized tax reform ahead of healthcare reform. They’re coming across as a motley crew rather than a party that can get things done," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee falls, Wisconsin. The Dow Jones Industrial Average .DJI fell 136.82 points, or 0.65 percent, to 20,769.04, the S&P 500 .SPX lost 16.54 points, or 0.70 percent, to 2,356.93 and the Nasdaq Composite .IXIC dropped 59.14 points, or 1 percent, to 5,842.39.The financial sector is the best performing of the 11 major S&P sectors since the election, up nearly 20 percent on President Donald Trump's proposals of deregulation and tax reform. The Russell 2000 is up nearly 14 percent over the same time frame.

Stocks have been hovering near record highs for most of the month as investors have also grown concern about elevated valuations. The S&P 500 is trading at about 18 times forward earnings estimates against the long-term average of 15 times, according to Thomson Reuters data. Declining issues outnumbered advancing ones on the NYSE by a 3.11-to-1 ratio; on Nasdaq, a 4.06-to-1 ratio favored decliners.The S&P 500 posted 25 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 73 new highs and 66 new lows. (Editing by Nick Zieminski)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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