US stocks dip on Trump jitters

Wall Street edged lower after President Donald Trump said he would shake up the country’s trade and tax policy.

Traders Kenneth Polcari, left, and Christopher Fuchs work on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

US stocks, the dollar and yields on government bonds fell after President Donald Trump said he would shake up the country’s trade and tax policy.

At the close of trade the Dow Jones index was lower by 27 points or 0.1 per cent after being down 95 points. The S&P 500 index declined 0.3 per cent while the Nasdaq dipped 2.4 points or less than 0.1 per cent.

In a meeting with business leaders Monday, Mr. Trump said he would cut taxes “massively” for the middle class and companies, and reduce regulations by at least 75 per cent. He also said the U.S. would impose a “very major” border tax on companies that move overseas.

Some market participants said Monday’s moves reflected unease over a lack of specifics in Mr. Trump’s plans.

One factor in the sell-off may have been the realisation that it will take time for the new administration to formulate details of its economic policies, said Jason Pride, director of investment strategy at Glenmede Trust Co.

“When you use loose terms like ‘massively’ and try to define the number of regulations being cut at 75 per cent, those feel very vague,” Mr. Pride said. “Investors are wanting a little more precision.”

The WSJ Dollar Index, which measures the US currency against 16 others, was recently down 0.6 per cent.

Gold and government bonds were up. Gold prices settled up 0.9 per cent at $1,215.60 an ounce. The yield on the benchmark 10-year Treasury note fell to 2.400 per cent, compared with 2.446 per cent Friday. Yields fall as bond prices rise.

Investors had earlier bought the dollar and US stocks, and sold long-dated government bonds after the election on expectations of tax cuts, spending increases and rolled-back regulation under the new administration.

That rally has stalled, however, with investors holding a bit more cash amid uncertainty over the timing and scale of these policies and worries that a more protectionist stance on trade could hamper growth and hurt corporate profits.

“The move is being described in the market as going from a Trump jump to a Trump dump,” said Patrick Spencer, vice chairman of equities at Robert W. Baird & Co.

He says he doesn’t expect the new administration to enact policies that jeopardise the stock market, however, noting that despite some of the president’s comments on trade, “there’s no doubt he’s strongly pro-business and pro-growth.”

Mr. Spencer also pointed to an improving global economic backdrop and US earnings growth as factors supporting the stock market.

Energy shares were the biggest losers in the S&P 500 on Monday, falling 1.1 per cent alongside a drop in the price of oil. US crude oil settled down 0.9 per cent at $52.75 a barrel amid worries over US shale production.

Halliburton fell 2.6 per cent after the company posted a loss and said its revenue fell in the fourth quarter, while shares of McDonald’s fell 0.7 per cent after the chain’s comparable sales fell in the US Reports from Alphabet and Microsoft are due later in the week.