The Trump rally got a bump on Tuesday — down. The U.S. stock market and several other asset classes, including bonds, sank markedly that day.
In fact, the broader indexes, from the Dow to the NASDAQ, slipped the most since October 2016, down more than 100 basis points on average. The Wall Street Journal reported that concerns over the Trump administration and its policies have started to impact these asset classes.
The conventional wisdom, as pertained to equities, had been that the Trump “business-friendly” initiatives would boost results and which would, in turn, lead to profits (and re-rating of stocks). The scramble to be in stocks may have inflated prices to the point that they were seen to be “overbought” and thus would decline rather sharply on a hair trigger reversal of sentiment. After all, stocks had been hitting records and valuations with new highs.
In terms of specific policy, the WSJ noted that there is uncertainty over the vote gathering that is needed to shutter the Affordable Care Act. The read across here is that the administration may not be able to get the votes needed to pass some of those business-friendly policies, including tax cuts.
In the end, the Dow was off 237 points to drop 1.1 percent, and the NASDAQ shed 1.8 percent. Bank stocks were off low to mid-single digits, as banks, of course, would be impacted by tax cuts and broader economic trends.