Worst S&P 500 Drop Since Election Day Emboldens Trump's Hatersby and
Falling techology, airlines spur concern immigration to blame
Banks fell even though he says he’ll do a number on Dodd-Frank
It was bound to happen sometime.
The biggest stock selloff since Donald Trump’s election victory cast the president in an unfamiliar role Monday: market villain. Equities in the S&P 500 Index fell as much as 1.2 percent, the most since Election Day, with companies seen vulnerable to his immigration policies among the biggest losers.
Tracing cause and effect is never easy in a market this richly priced with as many cross-currents. Banks, for example, were down even after Trump pledged to “do a big number” on Dodd-Frank. Still, from falling airlines to sliding software makers, some on Wall Street saw evidence Monday that the president’s Midas touch had weakened.
“Investors in general are feeling Trump is a bit reckless’’ on the immigration ban and dealing with Mexico on trade issues, Terry Morris, managing director of equities at BB&T Institutional Investment Advisors in Wyomissing, Pennsylvania said by phone. The firm oversees about $10 billion.“It creates friction worldwide and is causing uncertainty.’’
Some investors saw Monday’s decline as reality overtaking perception in assessing Trump’s market impact. While tax reform, infrastructure spending and deregulation remain abstract hopes with significant barriers to implementation, Trump’s plans for trade and immigration are suddenly much more tangible.
It’s a “culmination of Trump’s actions during his first full week in office,” BMO strategist Ian Lyngen wrote in an email. “The uncertainty created by Trump’s immigration initiatives, combined with the unknowns in terms of this week’s other key events -- Supreme Court nomination, earnings, FOMC, NFP etc. -- has risk-assets under pressure."
Until now Trump has rarely been anything but good for equities. More than $2.5 trillion has been added to share values since Election Day in a rally that left no industry behind as it pushed the Dow Jones Industrial Average above 20,000 for the first time. Speculation he would cut taxes, boost spending and dismantle regulation has sent the S&P 500 to no fewer than 10 records in the last month.
The pitch of the celebration took a hit Monday as Treasuries advanced with gold as Trump’s order on immigration raised concern that he may follow through with isolationist policies touted on the campaign trail. The CBOE Volatility Index soared 18 percent, the most since September.
On Monday he defended an executive order that sets new barriers to entry for people from Syria, Iraq, Iran, Sudan, Somalia, Yemen and Libya, and his administration has reportedly also drafted an executive order aimed at overhauling the H1-B visa program relied on by many technology companies to hire high-skill workers.
Concerns about Silicon Valley’s relationship with the White House were fomented by a report in the New York Times that Google may see more antitrust scrutiny under Trump’s administration.
Technology companies seen as in danger of losing key talent should immigration be restricted slid. Alphabet Inc. lost 2.4 percent, the most since Dec. 1, as Google Inc. Chief Executive Officer Sundar Pichai slammed President Trump’s move in a note to employees Friday. Mark Zuckerberg, the Facebook Inc. founder who voiced similar concern, saw his shares slip 1.5 percent, more than any time this year.
Financial company executives issued statements condemning Trump’s immigrant orders, including Mastercard Inc. CEO Ajay Banga, who said he’s “deeply concerned" and the order has caused “fracture in our society.” Goldman Sachs Group Inc. CEO Lloyd Blankfein said it’s “not a policy we support” and saw possible “disruption to the firm.”
“When you have a selloff, people start speculating and worrying too,” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, which oversees about $1.7 billion, said by phone. “Trump is adding to it. With all the headlines, people are getting nervous when they hear we’re closing borders and it’s going to affect businesses.”