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U.S. stocks began the week on the wrong foot, trading sharply lower on Monday as enthusiasm about President Donald Trump‘s agenda dwindled.
The Dow Jones industrial average fell more than 150 points at the open, with Goldman Sachs contributing the most losses. The S&P 500 pulled back 0.9 percent, with financials falling 2 percent to lead decliners. The Nasdaq composite lagged, falling 1 percent.
“I don’t think this is the beginning of a full-blown correction, but it’s definitely a reversal in market sentiment,” said Peter Cardillo, chief market economist at First Standard Financial.
The Trump administration was dealt a body-blow Friday after a House bill aimed at replacing Obamacare was pulled from the floor. The GOP bill faced opposition not just from Democrats, but also from conservative and more moderate Republicans, and was not able to secure enough votes to pass.
The House vote was seen as crucial for the Trump agenda. Trump had said the repeal and replacement of Obamacare must happen before action can be taken on his other plans, including a major tax reduction. Stocks have rallied significantly since the U.S. election on hopes of lower taxes, deregulation and fiscal stimulus.
“I am really disappointed that the ACA is not going to change for the better (for now) and am really [mad] that tax reform now may get all chopped up with potentially only modest changes,” said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
Trump said Friday the administration would move to try and slash taxes.
“It’s been such a powerful rally that it’s not surprising to see a pullback after a disappointment that big,” said Maris Ogg, president at Tower Bridge Advisors, referring to the health care bill’s defeat. “But the big picture really hasn’t changed.”
U.S. Treasurys rose, with the benchmark 10-year note yield sliding to 2.357 percent and the two-year note yield dipping to 1.227 percent. The U.S. dollar also declined against a basket of major currencies, with the euro near $1.09 and the yen around 110.2.
Overseas markets also faced pressure following the American Health Care Act’s defeat, with the pan-European Stoxx 600 index falling 0.75 percent.
There are no major economic data due Monday, but this week investors will digest the third reading on fourth-quarter GDP and personal income data, among others.
The Dow Jones industrial average fell 145 points, or 0.68 percent, to 20,451, with Goldman Sachs lagging and Coca-Cola leading advancers.
The S&P 500 dropped 18 points, or 0.84 percent, to 2,323, with financials leading nine sectors lower and utilities and real estate the only advancers.
The Nasdaq composite declined 55 points, or 0.94 percent, to 5,774.
About 10 stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 68 million and a composite volume of 189 million in early trade.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.6.