(Reuters) - Wall Street stocks edged lower on Thursday after lawmakers postponed a vote on a healthcare bill seen as President Donald Trump's first policy test.
The Dow Jones Industrial Average (.DJI) fell 4.72 points, or 0.02 percent, to 20,656.58, the S&P 500 (.SPX) lost 2.49 points, or 0.11 percent, to 2,345.96 and the Nasdaq Composite (.IXIC) dropped 3.95 points, or 0.07 percent, to 5,817.69.U.S.
Benchmark 10-year U.S. Treasuries traded in a narrow range, down 5/32 of a point in price, yielding 2.41 percent.
The U.S. dollar index slipped modestly as news of the postponement unfolded late in the trading day. The index held a small edge, up 0.04 percent at 99.71 percent.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER AT ALLIANZ, NEWPORT BEACH, CALIFORNIA:
"The continued divisions within the Republican will, at the margin, raise concerns about the prospects for the pro-growth legislation that the White House plans to subsequently submit to Congress, including tax reform."
STAN SHIPLEY, MANAGING DIRECTOR OF FIXED INCOME STRATEGY, EVERCORE ISI, NEW YORK:
“The capital markets are frozen by this healthcare vote. Volumes are down. No one is taking a position. It does change the probability on tax reform, which is very important for stocks and the fixed income space. Does it matter if they vote on this tomorrow or next week? They have until the Easter recess to vote on this. If this doesn’t happen by then, this gets to be an issue."
"If you are having a hard time here, how are they going to get tax reform done. No one thinks this is the final bill on healthcare. If they take it off the table before Easter, when will you get tax reform? This is very hard to govern. Until they say they are not talking anymore, investors will just have to sit and wait.”
OMER ESINER, CHIEF MARKET ANALYST AT COMMONWEALTH FOREIGN EXCHANGE IN WASHINGTON:
"Not much of a market reaction, surprisingly. That suggests that the market is still holding out hope that there’s some negotiations taking place and this additional time may give policymakers a little bit more of an opportunity to bridge whatever differences they have."
"I think the limited reaction in the market suggests that there is still hope of a deal, although the headlines that are coming out seem to suggest that that hope is probably fading pretty quickly."
AARON JETT, VICE PRESIDENT, GLOBAL EQUITY RESEARCH, BEL AIR INVESTMENT ADVISORS IN LOS ANGELES:
"Not much has changed from last night. I think that’s why the market ended kind of flat."
"The market will probably have some type of reaction based on how the Republican meeting goes tonight, but they obviously delayed it because they didn’t have the votes. There’s obviously still more work to do. It’s not as straightforward as the Republicans thought it would be."
"Nothing has been decided yet. It’s not time to panic yet... If they did have a vote and it was a no and it got shot down, I think that that is a negative for the market."
BUCKY HELLWIG, SENIOR VICE PRESIDENT, BB&T WEALTH MANAGEMENT, BIRMINGHAM, ALABAMA:
"We had the reaction the other day when the market was down big, and I think if investors start thinking about it, there's going to be some kind of decision on this whether it's in this form or not."
"The end game of this is it will get resolved and on a relative basis it will be an improvement, and therefore there's nobody lining up to buy stocks. And with the little dip that we've had, there's probably more money waiting to come into the market."
"So there's caution with investors but when this gets resolved, that will be the ticket to start buying stocks again because then they will go on to tax reform, infrastructure."
"If it drags on for a week, that could cause some nervousness."
JASON BROWNE, CHIEF INVESTMENT OFFICER, FUNDX INVESTMENT GROUP, SAN FRANCISCO:
"I think it’s just like when we’re going into the elections, like going into the Fed meetings, the uncertainty. So does it bother everybody that the vote got delayed? To me it’s not because of anything other than the fact here’s another day we have to wait to get the answer. As soon as we get the answer, your implied volatility declines."
"There are going to be those people that say that ‘well, if Trump can’t get this through, then he won’t be able to get any legislation through.’ I think that’s kind of silly."
"I just don’t think you’re going to get as much opposition when it comes to some of the tax reforms, or some of the infrastructure investments, that may be why they’re putting this first."
BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT, MENOMONEE FALLS, WISCONSIN:
"The market faded at the end of the day and now we're stuck in limbo. Delaying the vote could mean there's more arm twisting to be done. The market seems to be pricing in the possibility they will just pull the vote rather than risk a failure. Surrender is better than losing in this game. Then they will need to quickly pivot to tax reform to get a win on the board."
JAKE DOLLARHIDE, CHIEF EXECUTIVE OFFICER, LONGBOW ASSET MANAGEMENT, TULSA, OKLAHOMA:
"If this thing gets materially delayed or if we get a 'no' vote, we're going to see a horrific market reaction. But if they vote in the morning and it passes, we'll have a hell of a rally."
KEN POLCARI, DIRECTOR OF THE NYSE FLOOR DIVISION AT O’NEIL SECURITIES, NEW YORK:
“It’s creating nervousness because everyone knows it is a very close vote. They probably didn’t have the votes to do it today, so they are putting it off as if they didn’t want to vote in the middle of the night.
"The last thing they want is a no vote. If they hand him this defeat, what does that say about all the other stuff and the Republican party?
"The market was a little weaker, I’m surprised it didn’t end weaker than it did.
"I think tomorrow they are going to vote and it is going to be close but it will pass and then there will be a lot of uproar. It is never going to pass the Senate anyway.
DAVID R KOTOK, CHAIRMAN & CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS:
"Not good. Market doesn't like it. This healthcare piece is really about more than just Obamacare. It is needed as part of the budget and tax realignment in order to get to tax reform. So delay on healthcare equates to delay on tax cuts. That is why the market turned red when the news flow suggested they didn't have a deal."
"After trump congress speech market turned from rising to flat. Even as fed was benign market stayed flat to slightly red. As it is today. Apple has been an exception and it is a large weight so it is masking weakness in many stocks. The market wants tax cuts. If it gets them market goes higher. If it doesn't get them market corrects to a lower level. So today was a reversal and was driven by the news flow. Remember that this healthcare debate is really a piece of a tax cut debate."
MICHAEL O’ROURKE, CHIEF MARKET STRATEGIST AT JONES TRADING, GREENWICH, CONNECTICUT:
"We have to watch the headlines develop. It's one vote. It's one step in the process. It would be a clear negative if the vote fails. This legislation needs to pass in order to head toward the next step which is tax reform and after that the infrastructure spending."
(Americas Economics and Markets Desk; +1-646 223-6300)