Stocks Take a Hefty Drop with GOP Health Care Plan in Limbo

Stocks Take a Hefty Drop with GOP Health Care Plan in Limbo

Stocks Drop with GOP Health Care Plan in LimboMarch 21, 2017, saw a dramatic decrease in the stock market with financial names falling more than 2.5 percent, reports Fox News. One driving force behind the drop is the uncertainty that Trump will reach his fiscal policy promises, most particularly is the GOP’s health care plan that is not quite certain.

Some traders attribute the decline to a lack of progress on the hoped for policies Trump’s administration made during the inauguration, including the fiscal stimulus package and tax cuts. Government-bond yields and the dollar also took a hit on the 21st, with the major indexes heading down a steep decline –and possibly the steepest seen this year thus far.

Dow Jones Drops 200 Points

The Dow Jones Industrial Average fell approximately 200 points, with Goldman Sachs currently taking the host of the losses. So far, the session is on track for the harshest numbers since October.

Now the stock market is entering their middle of the range yield for 10-year investments. Unfortunately, the drop in stock value has taken the spotlight away from a recovering economy.

Also, the United States saw mixed yields, with their 10-year note holding at 2.42 percent and the two-year note trading for 1.26 percent. The lower interest rates on loans are likely to blame for poor yields and stocks from financial institutions, however.

Affordable Care Act to Blame for Stock Market Issues?

Republicans are working on a replacement for the Affordable Care Act, and Trump has threatened members of the House that if the bill does not pass by Thursday, those individuals may no longer have their seats as of 2018.

For investors, the healthcare uncertainty is creating a harsher result.   If Trump cannot successfully repeal and replace the former health care laws, it will call into question his ability to follow through on other promises. Investors are losing their confidence in Trump’s administration until he follows through on his biggest promise to reform health care.

Health care reform will not directly impact the stock market, but it will indirectly affect financials and stocks for the future. If the health care reform is not successful, it will make investors question what the president and Congress can do, and some investors may lose their confidence in the new administration, which decreases the number of investments for the future.

Other areas that are tied to the outcome of the health care reform are things like tax reform, tax holidays, infrastructure spending, and regulatory changes. Therefore, investors are wary that the stalls on the health care bill are just a sign of more stalls on future promises from the administration.

While the Dow took the hardest hit, the S&P 500 only dropped 23 points. If the points move further, they will certainly be within the range of the lowest stock numbers for the year, and the financial sector is likely to be the hardest hit. The Trump plan to roll back a regulation that affects financial businesses along with the Federal Reserve decision are just two areas that investors will be watching.