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Dow Led Lower by Bank Stocks -- WSJ

19 Jul 2017 6:32 am

GOP's failure to pass a health-care bill dashes some investors' hopes for economic stimulus
By Akane Otani and Riva Gold 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 19, 2017).
   -- Dollar falls to postelection low on health-care bill doubts 
   -- Stocks in U.S., Europe and Asia under pressure 
   -- Netflix, Goldman Sachs, Bank of America earnings in focus 

The Dow Jones Industrial Average retreated Tuesday as the dollar and government-bond yields came under fresh pressure.

The day's moves came after Senate Republicans' latest plan to vote on a measure dismantling the Affordable Care Act was derailed. The struggle to pass a health-care bill amplified doubts about the Trump administration's ability to implement policies such as tax cuts and fiscal stimulus, some investors and analysts said.

Hopes for such policies had initially pushed stocks, the dollar and government-bond yields higher after Election Day.

If Republicans can't pass a replacement health-care bill, "there is little else [they] could do" with passing other legislation, said Toshihiko Sakai, senior manager of forex and financial-products trading at Mitsubishi UFJ Trust & Banking.

The Dow industrials fell 54.99 points, or 0.3%, to 21574.73, weighed down by declines in shares of banks.

The S&P 500 edged up 1.47 point, or less than 0.1%, to a fresh closing high of 2460.61 and the Nasdaq Composite added 29.87 points, or 0.5%, to 6344.31. It was the Nasdaq's first record since June 8.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, fell 0.5% to a fresh postelection low, while the yield on the 10-year U.S. Treasury note fell to 2.263% from 2.309% on Monday. Yields fall as bond prices rise.

Although stocks around the world mostly fell Tuesday, some investors said they believe the effect of fiscal-policy changes on the broader stock market will ultimately be muted.

Some investors' hopes for tax cuts and fiscal stimulus have already dimmed, said Ernesto Ramos, head of equities at BMO Global Asset Management. "What's driving the markets here is really the earnings story," he said.

A flurry of corporate-earnings results swung individual stocks on Tuesday.

Dow component Goldman Sachs shed $5.95, or 2.6%, to $223.31 after the firm reported a 40% decrease in its fixed-income trading business. Declines in the stock, the worst performer in the Dow industrials for the day, wiped off about 41 points from the index.

Shares of Bank of America fell 12 cents, or 0.5%, to 23.90 after the company reported profit that beat analysts' expectations but said trading revenue fell 9% from the year-earlier period.

Shares of Netflix jumped 21.90, or 14%, to 183.60 after the company reported adding more subscribers than analysts had expected in the second quarter.

Elsewhere, the Stoxx Europe 600 dropped 1.1%, snapping a four-day winning streak.

In Asia on Tuesday, Australia's S&P/ASX 200 fell 1.2% and Japan's Nikkei Stock Average lost 0.6%.

Write to Akane Otani at akane.otani@wsj.com and Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

July 19, 2017 02:32 ET (06:32 GMT)

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