Market Overview: The markets are reacting today to Friday’s failed vote on a bill that would have repealed the Affordable Care Act, otherwise known as the ACA. This key vote was originally scheduled to take place on Thursday, but as it became apparent that the Republicans did not have the necessary votes, they elected to postpone the vote until Friday. As the day progressed on Friday, however, it became clear that the party still lacked the necessary votes to pass the legislation. This caused the bill to be pulled from the table in what some are considering a major defeat to the Trump administration.
Key Data Points: Today is light in terms of economic data being released. Markets will get the latest reading on the Dallas Fed Manufacturing Survey later this morning. There are also two Fed officials speaking at various engagements today.
The rest of the week will have a significant amount of data set for release. Investors will get the latest readings on Pending Home Sales, MBA Mortgage Applications, GDP, Weekly Jobless Claims, Consumer Sentiment, Chicago PMI and more.
Outside Markets: Stocks are taking it on the chin in early action today as concerns over Friday’s failed vote are likely causing some investors to book profits.
Interest rates are declining this morning as risk aversion is taking hold. The dollar index is trading at multi-month lows and is in a firm downtrend. The greenback could potentially return to pre-Trump election victory levels.
The Big Picture: Friday’s failed vote is considered by some to be a major blow to the Trump administration. It could also call into question the administration’s ability to pass other key pieces of legislation that it campaigned on.
The rally in stocks following the Trump Presidential victory has been built on the notion of lower taxes and massive fiscal spending. A repeal of the Affordable Care Act was also a major campaign topic for the administration.
If investors become increasingly nervous that the administration may not be able to move forward with its agenda, selling in stocks could accelerate. Increasing risk aversion could potentially keep interest rates at bay, and could also fuel further buying in gold and other perceived safe haven assets.
Gold may also see further strength on an improving technical posture and lower dollar index. Gold is poised to challenge its recent highs, and an upside breakout could potentially fuel a fresh leg higher in price.
