S&P 500; US Indexes Fundamental Forecast – March 24, 2017
The three major U.S. equity indices are currently shedding gains shortly before the House votes at 1930 GMT on the American Health Care Act.
Early in the session, all three major indices rallied, but they began to retreat as doubts grew about whether or not the bill will pass in the U.S. House of Representatives. Reportedly, Speaker Paul Ryan told President Trump that he does not have enough votes to pass the bill.
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Stocks may be weakening due to the uncertainty and not necessarily because the bill may not get passed. Bearish investors are saying Trump’s inability to get Obamacare repealed and his new plan put in place will be a huge negative for stocks because it will cast doubts on Trump’s ability to accomplish his key promises to reform taxes, relax expectations and increase fiscal spending.
Bullish investors see things differently. Some say the market is not breaking sharply lower on Friday because the White House has been clear that, if this doesn’t get done, they’ll move on.
Today may not be the best day to assess whether to cut or increase stock market investments. Because the vote will take place late in the session, we’re likely to see a two-sided, volatile reaction. Professional investors are likely to take to the sidelines this late in the trading session and ahead of the week-end. They are likely to take the week-end to digest the impact of today’s events on stock prices.
I have to side with the bulls on this one. Sure, there will be selling, but it will be an emotionally driven move. Investors want to see increased earnings to support higher stock prices. One way to increase corporate earnings is to cut taxes and this is what Trump has promised. So the faster the lawmakers can move on to tax reform, the closer we come to a better deal for business.