Summary

The tech-heavy Nasdaq led a broad Wall Street decline on Tuesday with stocks falling more sharply after a healthcare bill was delayed in the Senate, raising fresh questions about President Trump’s domestic agenda.

The benchmark S&P 500 index posted its largest one-day decline in about six weeks and closed at its lowest point since May 31.

Major indexes extended losses after Senate Republican leader Mitch McConnell decided to put off a planned vote on a bill to dismantle the Affordable Care Act until after the Senate’s July 4 recess.

The healthcare legislation, which has encountered resistance from several Republicans, is the first plank of Trump’s domestic policy agenda, with investors eager for him to move onto his other plans including tax cuts, infrastructure spending and deregulation.

Promises for such domestic polices helped fuel a 13.1-percent rise for the benchmark S&P 500 since Trump’s Nov. 8 election.

Big tech names weighed most heavily on the S&P 500. Google parent Alphabet fell 2.5 percent after EU antitrust regulators hit the tech giant with a record $2.7-billion fine.

The Nasdaq had its worst day since a tech-led slide on June 9 raised questions about the sector.

On Tuesday, the tech sector pulled back 1.7 percent. It remains the best-performing major group this year.

The healthcare sector index weakened after news of the vote delay, and ended down 0.9 percent.

Financials had the only index to end in positive territory, rising 0.5 percent.

Data showed consumer confidence for June rose more than expected, which could bolster the Fed’s case for another rate hike this year. Philadelphia Fed President Patrick Harker said the Fed rightly plans to raise rates once more this year, given recent inflation weakness is likely temporary.

Federal Reserve Chair Janet Yellen said she does not believe there will be another financial crisis for at least as long as she lives, thanks largely to reforms of the banking system since the 2007-09 crash.

Investors are gearing up for second-quarter corporate earnings season after a strong first quarter, with the S&P 500 trading at nearly 18 times forward earnings estimates, well above its long-term average of 15 times.

Home Prices Slow Down

Single-family home prices slowed a bit in April, a survey showed on Tuesday. According to the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas, prices rose 5.7 percent in April on a year-over-year basis, after an unrevised 5.9 percent increase in March.

Despite coming in below expectations, David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said the supply of homes has barely kept up with demand and inventory of new or existing homes for sale had diminished to a 4-month supply. That is likely to keep home prices on the rise.

“Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up,” Blitzer said.

Monthly, prices in the 20 cities rose 0.3 percent in April on a seasonally adjusted basis, the survey showed, short of expectations calling for a 0.4 percent increase. On a non-seasonally adjusted basis, prices increased 0.9percent from March.

No Financial Crisis on the Horizon

Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that there will be another financial crisis in her lifetime, due to reforms of the banking system since the 2007-09 crash.

“Would I say there will never, ever be another financial crisis?” Yellen said at a question-and-answer event in London.

“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be,” she said.

Yellen said it would “not be a good thing” if reforms of the financial services industry since the crisis were unwound, and urged those who had helped manage the fallout at the time to be vocal in preventing such a dilution.

President Trump has said during his election campaign that he would cut banking regulation. The Treasury Department earlier this month proposed easing up on restrictions big banks now face in their trading operations.

Yellen declined to comment when asked about her relationship with Trump but said she had a good working relationship with U.S. Treasury Secretary Steve Mnuchin.

She also reiterated her view that the U.S. central bank would continue to raise interest rates only gradually.

“We think it will be appropriate for the attainment of our goals to raise interest rates very gradually to levels that are likely to remain quite low, although there is uncertainty about this, to remain low by historical standards for a long time,” she said.

She said the stockpile of bonds the Fed amassed to help the economy through the crisis would be shrunk “gradually and predictably.”

Asked about share price valuations by a member of the audience, Yellen said “by standard metrics, some asset valuations look high but there’s no certainty about that.”

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