| March 27
March 27 U.S. stocks slid on Monday amid
concerns that Republican President Donald Trump may struggle to
push a sweeping overhaul of the tax code through Congress in the
wake of his party's failure last week to pass broad healthcare
Trump's pledge to cut taxes, including a lowering of the
rates paid by corporations, was a pillar of his 2016
presidential campaign and provided much of the fuel for the
heady stock market rally that followed his Nov. 8 victory.
The White House has sought to refocus attention on that part
of Trump's agenda since the collapse on Friday of a Republican
bill to reshape the U.S. healthcare system largely by gutting
Democratic former President Barack Obama's 2010 healthcare law.
"The markets aren't really concerned about healthcare," said
Randy Frederick, managing director of trading and derivatives
for Charles Schwab in Austin, Texas. "What the markets are
concerned about is tax policy. So now the more important issue
has come to the forefront. The question is, will they be able to
get that done? I don't know."
The major U.S. stock indexes were down, with the S&P 500
0.3 percent lower, while benchmark 10-year Treasury notes
were up 11/32 in price for a yield of 2.36 percent after hitting
a one-month low in yield earlier.
Analysts at Bank of America Merrill Lynch said in a research
note that a tax bill, "if passed at all, could be a very
watered-down version of current proposals."
The U.S. tax code has not undergone a major overhaul since
1986 during Republican former President Ronald Reagan's
administration, and there is tacit acknowledgement in both
parties that some changes are needed, especially in terms of
easing the burdens of middle-class Americans.
Democrats, however, are opposed to tax cuts for the rich.
They also fought Republican former President George W. Bush's
tax changes that they said rewarded the wealthiest Americans.
That means Republicans, who control Congress and the White
House for the first time in a decade, may have to vote as a bloc
to pass the tax plan that investors would most want, something
far less certain after the healthcare bill debacle.
Trump and House of Representatives Speaker Paul Ryan were
unable to keep Republican lawmakers in line for the healthcare
legislation. They pulled it off the House floor after a
rebellion by the most conservative Republican lawmakers who
argued that parts of it were too similar to the Obamacare law it
was meant to replace as well as moderates who worried about the
number of Americans who would lose health insurance.
Keeping moderates and the most conservative elements of the
party together is a tricky balancing act.
The healthcare legislation was Trump's first major
legislative initiative since taking office on Jan. 20.
Trump said on Friday after the failure of that legislation
that he would turn his attention to getting "big tax cuts"
through Congress. But winning congressional approval of an
ambitious tax proposal could be complicated by the same
intra-party discord on display last week over healthcare.
"Trump is stuck, he can't cajole the arch conservatives in
the Republican Party and at the same time, my sense is the
Democrats don't want to throw him a bone either, so it is going
to be difficult," said Jack Ablin, chief investment officer at
BMO Private Bank in Chicago.
(Reporting by Chuck Mikolajczak, Megan Davies and Richard Leong
in New York; Writing by Paul Simao; Editing by Will Dunham)