US stocks post biggest drop of 2017 on doubts about Trump agenda, Dow slides 240 points

SPH Brightcove Video
Investors worried that President Trump will struggle to deliver promised tax cuts. The Dow and S&P 500 had their worst one-day performances since October.
The Dow Jones industrial average fell by about 238 points, a drop of more than 1 per cent. PHOTO: AFP

NEW YORK (AFP) - Wall Street stocks suffered their worst declines of the year on Tuesday (March 21) as doubts increased about President Donald Trump's ability to advance his agenda in Washington.

All three major US indices fell sharply, with the Nasdaq tumbling the most with 1.8 per cent decline, two days ahead of a key congressional vote on health care policy.

The Dow Jones industrial average fell by about 238 points, a drop of more than 1 per cent. It was its biggest slide of the year and biggest decline since the US election. The broader S&P 500 was down 1.2 per cent.

Neither index had ended the day with a 1 per cent drop since mid-October. This was their worst day since September.

European equity markets also dropped, along with Japan's Nikkei. Analysts said sinking oil prices also weighed on stocks.

Trump traveled to Capitol Hill to try to coax support from fellow Republicans for his health care bill, warning the party could lose its majority if it fails to repeal and replace Obamacare in Thursday's vote.

Analysts fear a setback on health care will dim momentum for the rest of Trump's agenda, including highly-anticipated tax cuts and deregulation.

"The markets have reversed" because of growing concern about possible opposition to Trump's reforms within Republican party, said Gregori Volokhine of Meeschaert Financial Services.

Banking shares were especially weak, with Bank of America dropping 5.8 per cent and Goldman Sachs losing 3.8 per cent. The sector had been a highflyer after the election in anticipation of regulatory rollbacks promised by Trump.

"There seems to be doubt creeping in investors' minds whether or not the deregulation that Trump talked about will be put into effect, as well as tax reform and lower tax rates," said Bill Lynch, director of investment at Hinsdale Associates.

Elsewhere, London finished down 0.7 per cent after official data showed British 12-month inflation soared to 2.3 per cent in February, the highest level since 2013.

The news sent the pound flying higher on expectations of rising interest rates, putting pressure on FTSE companies.

The euro strengthened after a strong debate performance by French presidential candidate Emmanuel Macron lifted hopes the centrist could hold off far-right leader Marine Le Pen in the coming elections.

Paris equities slipped 0.2 per cent, while the German DAX lost 0.8 per cent.

Tokyo fell 0.3 per cent as a rising yen hit export-oriented stocks.

US oil prices finished at their lowest price of the year at US$47.34 per barrel, down 88 cents, on worries about rising US oil production.

Join ST's Telegram channel and get the latest breaking news delivered to you.