U.S. equities moved lower on Monday as President Donald Trump started his first week as the leader of the free world. He held a meeting with business executives, pledging to drastically cut the burden of regulation and issued a flurry of executive actions, including a federal hiring freeze and a withdrawal from the Trans-Pacific Partnership.
He also reiterated support for a border tax as well as cutting taxes for corporations and the middle class. But much of this has been priced in already, given the historic post-election rally that is now giving way to some “Sell the News” dynamics.
In the end, the Dow Jones Industrial Average lost 0.1%, the S&P 500 lost 0.3%, the Nasdaq Composite lost a fraction and the Russell 2000 lost 0.3%.
Treasury bonds were stronger, the dollar was weaker, gold was 0.9% higher and crude lost 0.9% amid rising concerns about the enforcement of the OPEC production cut agreement as well as evidence of rising U.S. drilling rig activity. After the close, the U.S. dollar was pushed lower after Treasury Secretary nominee Steven Mnuchin written response to Senate questions warned of an “excessively strong dollar.”
The rise in gold boosted gold and silver stocks, lifting the Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) 2.5% for Edge subscribers. Yield-sensitives led the way thanks to the rise in bonds, with REITs up 0.6% and telecoms up 0.5%. Energy names were the laggards, down 1.1%.
Dish Network Corp (NASDAQ:DISH) gained 2.2% thanks to an upgrade from analysts at Morgan Stanley noting the industry is entering an M&A-friendly regulatory environment and benefits from possible industry consolidation. T-Mobile US Inc (NASDAQ:TMUS) gained 1% after JPMorgan analysts touted the likelihood of a tie up with Sprint Corp (NYSE:S) and assigned a 90% chance the company will be involved in a strategic tie-up within the next five years.
Qualcomm, Inc. (NASDAQ:QCOM) fell 12.7% after Apple Inc. (NASDAQ:AAPL) filed a lawsuit against the company accusing it of monopolizing the baseband market and withholding around $1 billion in rebates. Oil services firm Halliburton Company (NYSE:HAL) fell 2.9% after reporting better-than-expected earnings as light revenues disappointed. Aetna Inc (NYSE:AET) fell 2.7% after a federal judge blocked its $37 billion planned acquisition of Humana Inc (NYSE:HUM) on anti-competitive grounds.
On a technical basis, the situation remains unchanged: The Dow remains in the midst of a tight two-month trading range bounded by 20,000 on the high side and 19,750 on the low side. Amid narrowing market breadth and extended sentiment, stocks remain vulnerable to a downside move here.