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U.S. stocks move lower as inauguration and Trump policy looms

Published 01/17/2017, 12:07 PM
Updated 01/17/2017, 12:07 PM
© Reuters.  Wall Street moves lower on profit-taking after Trump-rally gives way to nerves surrounding policies

© Reuters. Wall Street moves lower on profit-taking after Trump-rally gives way to nerves surrounding policies

Investing.com – Wall Street moved lower during midday trade on Tuesday as investors took profit ahead of the uncertainty surrounding what fiscal policies Donald Trump will begin to move when he takes office on Friday and as currency markets on both sides of the Atlantic were moving off of political remarks.

At 12:01PM ET (17:01GMT), the Dow Jones fell 32 points, or 0.16%, the S&P 500 dropped 4 points, or 0.17%, while the tech-heavy Nasdaq Composite traded down 23 points, or 0.42%.

The Dow has risen approximately 9% since its closing price on election day in a move named the “Trump-rally” as gains were attributed to speculation that the incoming President will embark on a wave of fiscal policies to reduce taxes and expand growth.

Details of said policies have been scarce and market participants appeared to choose to pocket gains ahead of the January 20 inauguration for a third consecutive session on Tuesday as they take a pause and evaluate what actions Trump will take to spur growth in the first 100 days of his presidency.

“Stocks have risen in the post-Trump trade without a commensurate increase in earnings-per-share estimates for S&P 500 companies,” earnings trend analysis provider The Earnings Scout (ES) warned.

“Be cautious, not greedy,” they recommended, noting that while the 32 S&P companies having reported fourth quarter earnings so far have shown growth accelerating, but “beat rates are down though and estimates are going lower”.

In Tuesday’s earnings reports, shares in Morgan Stanley (NYSE:MS) fell 3% despite beating on both the top and bottom line. Some experts attributed the downside to profit-taking as the bank had soared nearly 29% in the post-election rally.

Shares in Dow component UnitedHealth (NYSE:UNH) dropped nearly 2% after better-than-expected forecasts. Analysts once again suggested profit-taking as the health insurer faces uncertainty in the face of Trump’s promise to do away with Obamacare without clarity on how Americans will obtain healthcare.

Wal-Mart (NYSE:WMT) as the world's largest retailer said it would create about 10,000 jobs in the United States this year, about the same as in previous years, as President-elect Donald Trump puts pressure on companies to hire more U.S. workers.

In a clear move based on Trump remarks, the U.S. dollar collapsed to one-month low against a basket of major currencies after President-elect warned that the greenback was “too strong,” according to a report in the Wall Street Journal on Monday.

Anthony Scaramucci, a senior member of Donald Trump’s economic advisory council, reiterated that sentiment on Tuesday, warning about the risk from a stronger dollar.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 1.05% to 100.46 by 12:04PM ET (17:04GMT).

Separately, Trump warned that the border adjustment provision, a feature of House Republicans' plan that would tax imports and exempt exports, is "too complicated."

Elsewhere, markets were taking stock of political comments on the so-called Brexit as U.K. Prime Minister Theresa May outlined plans for negotiating new trade agreements as the country exits the EU single market.

Cable soared almost 3% after her speech as market participants read May’s comments to mean that she was angling for a so-called “soft Brexit” that could pave the way for completely new trade agreements that would ease the transition and support the British economy.

Meanwhile, oil continued to find support on Tuesday from a weaker dollar, that makes the commodity cheaper for investors using foreign currencies, and continued optimism that major oil producers are sticking to their pledge to cut back output as part of a deal to curb global oversupply.

U.S. crude futures gained 0.57% to $52.67 by 12:06PM ET (17:06GMT), while Brent oil slipped 0.02% to $55.85.

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