Business

Wall Street suffers worst day this year

NYSE trader Image copyright Reuters

Wall Street suffered its worst day this year as investors fretted about whether President Donald Trump will be able to deliver promised tax cuts.

Banks, which have helped to propel share markets to record highs recently, were among the worst casualties.

Bank of America fell 5.77% and Goldman Sachs lost 3.72%.

At the close, the Dow Jones was 1.14% off at 20,668.01 points and the S&P 500 lost 1.24% to 2,344.02. The Nasdaq fell 1.83% to 5,793.8.

For the S&P 500 it was the steepest one-day sell-off since before Mr Trump's election victory. The Russell 200 index of smaller companies also fell, closing down 2.7% and erasing its gains for the year.

Meanwhile, the CBOE Volatility index, Wall Street's so-called "fear gauge", jumped 10%.

Analysts attributed the share selling to reduced confidence that Mr Trump's pro-growth policies, including financial deregulation and tax cuts, would occur any time soon.

Investors saw the Trump administration's struggles to push through his healthcare legislation overhaul as a sign he may face setbacks delivering the proposed corporate tax cuts.

"The market is starting to get a little fed up with the lack of progress in healthcare because everything else is being put on the back burner," said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.

Another sector that was hit was transportation. United Continental lost 3.3% and railroad operator CSX fell 2.7%. Hertz Global sank 8.7%.

Companies that make steel, chemicals, and other basic materials also slid. AK Steel plunged 10.4% and US Steel lost 9%.

The Dow had just two gainers, Coca-Cola and Chevron, up 0.76% and 0.35%.

Taking profits

US crude oil prices hit a one-week low of $47.23 a barrel as concerns about new supplies overshadowed the latest talk by Opec that it was looking to extend output cuts beyond June.

US shares had started the day higher, but soon followed a sell-off in Europe that saw the main markets in London, Paris and Frankfurt all close down.

Wall Street has fallen for four days in a row, although the previous losses were small.

Tuesday's losses were a reversal of the patterns that have endured since Mr Trump was elected in November, but share markets still remain sharply higher since then.

Kate Warne, an investment strategist for Edward Jones, said investors are taking some profits after the market's long post-election winning streak.

But she added that Wall Street is especially eager for the administration's tax reform proposals.