US Stocks Slide as Trump Effect Fades, Dollar Slumps
US stock moved off their session lows around midday, but are still set for their worst day this year as the lack of details on economic policy during Donald Trump's press conference hit investor optimism and winded a post-election rally that had already begun to lose steam.
Thursday, January 12, 2017 - 00:00
Unlike yesterday when Pharma took the brunt of losses, today the losses were broad-based. All but 3 of the 30 components were lower, while 10 of the 11 major S&P 500 sectors declined.
Yesterday in his first news conference since the election, Trump talked around questions posed by the press corps and gave no tangible details on tax cuts or infrastructure spending. He instead lashed out at US spy agencies and media houses over what he called a 'phony' Russia dossier that had been leaked to the press on Tuesday. There seems to be a high probability of more volatility in the markets if his agenda does not go through or may take longer than he expects, as traders will become anxious.. and, anxiery breeds volatility.
At one point today, the Dow and the S&P were set for their biggest one-day percentage loss since last October. Despite the recovery, the Dow has further retreated from the 20,000-point mark, while the Nasdaq is set to snap a four-session streak of closing at record highs. The S&P 500 recouped three-fourths of its losses in afternoon trading after falling the most in two weeks, as declines in banks and technology shares eased.
A day after Donald Trump’s press conference provided few specifics on the timing and scope of planned policies from infrastructure spending to trade pacts, investors began turning attention to corporate earnings and data on retail sales during the holiday season. China export data is also due Friday. Trump yesterday gave investors little reason to add to bets that had taken the dollar to a 14-year high and stocks to records.
The dollar slumped on speculation post-election market moves went too far as investors await corporate earnings and economic data for clues on the strength of the American economy. The dollar fell to 114.30 yen from 115.43 on Wednesday. The euro was rising at $1.0637 from $1.0576. The pound, which had been weakening recently amid concern that Britain might break off completely from the European Union's single market, was moving higher versus the dollar Thursday. The British currency was down to $1.2176 from $1.2208.
In Europe, Germany's DAX fell 1.1%, while France's CAC 40 slid 0.5% despite new data showing eurozone industrial production jumped 1.5% in November. Britain's FTSE 100 was flat. In Asia, Japan's benchmark Nikkei 225 dropped 1.2%. And, Hong Kong's Hang Seng dipped 0.5%.
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