Two-day rally in US market withered after President Trump's performance at Arizona rally where he threatened to shut down the government if his proposed wall is not funded. In today's trading, a pull back saw the Dow drift -0.40%, the S&P 500 gave up gains, falling -0.35% and Nasdaq was down -0.30%.
- Dow 21,812 -0.40%
- S&P 500 2,444 -0.35%
- Nasdaq 6,278 -0.30%
- Russell 2000 1,369 -0.13%
- NYSE Composite 11,785 -0.16%
- Gold 1,295 +0.36%
- Oil WTI $48 +1.13%
- 10-Year Treasury Yield 2.16% -0.04%
Media agencies fell sharply lower down -4.74% while airlines fell -2.78% and railroads -1.46%. Omnicom Group was down -7% and Interpublic fell -6.32% after WPP, the world's biggest advertising group, cut its forecast for revenue on weaker advertising spending weighing on other European media stocks.
Interpublic in late July had warned that the uncertainty defining the Trump administration was impacting on their clients causing them to hold back on spending. CEO, Michael Roth said in the FT, “Our results in the quarter reflect the fact that macro uncertainty and political gridlock are affecting spend, particularly in the US with clients demonstrating caution in terms of releasing budgets.”
Beauty manufacturer Coty was also under pressure and was down -5.48%. Treasuries and gold saw a rise as investors turned to haven assets. Bond price and yield have an inverse relationship when prices rise, yields fall. The 10-year Treasury yield fell -0.04% to 2.17%. Gold rose +0.36% to $1,295.
Trump's Walll and Washington's rhetorical exercise
The market has shown some resilience in dealing with the Trump administration which has lurched from crisis to crisis and is beset by infighting, with a focus on rosier economic outlook and stronger earnings. However, whether the market will continue to shrug off White House inaction on several agenda items remains to be seen.
Katie Nixon, chief investment officer at Northern Trust Wealth Management said in the LA Times that the market had little expectation of help from Washington: "Actions speak louder than words, and when we see actual action, you'll see markets sit up and take notice," she said. "But so far it's been a rhetorical exercise."
Trump said in a rally on Tuesday night that he was prepared to shut down government if his request for $1.6bn to fund the wall was not approved.