Stocks Steady as Investors Watch Health Bill's Progress
DOW JONES & COMPANY, INC. 9:41 AM ET 3/24/2017
Global markets steadied Friday as investors watched the progress of a health bill seen as a key test of the new administration's ability to push through business friendly policies.
Governments bonds and the dollar stalled, while the Dow Jones Industrial Average added 31 points, or 0.2%, to 20688 shortly after the opening bell. The S&P 500 gained 0.2%, and the Nasdaq Composite rose 0.4%.
Markets in Asia mostly advanced, but European stocks edged lower, tracking Thursday's modest pullback on Wall Street.
A vote to replace the Affordable Care Act is now expected to happen Friday after a one-day postponement. White House budget director Mick Mulvaney said if the bill fails, President Donald Trump will leave the 2010 health law in place.
Many investors view the bill as a barometer of the Trump administration's ability to implement its wider policy agenda, including tax reform and infrastructure spending plans that helped lift U.S. stocks to record highs earlier this year.
"This is an inflection point," said Philip Blancato, chief executive at Ladenburg Thalmann Asset Management. For markets, "this is the first real test of the Trump presidency, to see if it's really a presidency that can affect change, he said. "The concern is if it doesn't get passed, none of his legislative agenda will go through."
Modest cracks in the so-called Trump-trade, a bet that stimulative policies will help promote higher equities and government bond yields, emerged earlier this week as investors headed to the end of the first quarter. Major U.S. stock indexes posted their biggest daily decline in months on Wednesday, while redemptions from U.S. equity funds jumped to a 38-week high, according to fund-tracker EPFR Global.
The Russell 2000 small-stock index, seen as a key beneficiary of the new administration's policies, wiped out all its gains for the year, while S&P 500 financials are on track to end the week nearly 4% lower. Utilities companies, which are less sensitive to the economic cycle, are the only S&P 500 sector on track for weekly gains.
To be sure, recent declines have been relatively muted in absolute terms, with the S&P 500 on track to end the week just 1.4% lower. Credit markets, particularly in the health-care sector, have yet to show a major reaction to the debate in Washington, said Anthony Doyle, investment director at M&G Investments.
Many investors still believe easy monetary policy and a strengthening global economy will provide a floor for stock markets even at high valuations. Surveys of purchasing managers showed Friday that the eurozone economy grew at its fastest pace in six years in the first three months of 2017, echoing upbeat economic data in the U.S.
"In the short term, I think the global economy has some momentum," said Mr. Doyle.
In corporate news, shares of pharmaceutical company Mylan declined 1.7%. Micron Technology climbed 12% after the memory and storage company posted better-than-expected earnings.
The Stoxx Europe 600 slipped 0.2% despite the upbeat reading on the eurozone economy, with shares of insurers and oil-and-gas companies leading declines.
Earlier, markets in the Asia-Pacific region mostly moved higher, led by the financial sector. Australia's S&P/ASX 200 gained 0.8%, the Hang Seng added 0.1%, the Shanghai Composite Index rose 0.6% and Japan's Nikkei Stock Average climbed 0.9%.
Asian shares got a boost from a stronger U.S. dollar, which gave back most of its gains during European morning trading.
The dollar was last up 0.1% against the yen, on track to snap its longest losing streak since 2011, as Bank of Japan Gov. Haruhiko Kuroda said Friday he wants to push ahead with a low-rate policy.
The euro was up 0.2% at $1.0800. Talk of the European Central Bank ending its very accommodative policy is " premature," the central bank's chief economist said in an interview published Friday.
Yields on 10-year U.S. Treasurys were little changed at 2.417% Friday from 2.418% Thursday, while 10-year German bund yields slipped to 0.411% from 0.429%. Yields move inversely to prices.
In commodities, Brent crude oil edged up 0.5% to $50.93 a barrel, on track to rise for the first time in five sessions. Gold fell 0.1% to $1,245.60 an ounce.
Ese Erheriene, Takashi Nakamichi,
Paul Hannon
, Will Connors and Kristina Peterson contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
03-24-170941ET
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