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Stocks have their worst day of the year

The New York Stock Exchange in Manhattan.

The New York Stock Exchange in Manhattan.

(Bryan R. Smith / AFP/Getty Images)
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U.S. stocks took their biggest loss in five months Tuesday as a healthcare bill backed by President Trump ran into trouble in Congress, which raised some questions about his agenda of faster economic growth spurred by lower taxes and cuts in regulations.

Banks plunged as bond yields continued to fall. Transportation companies including airlines, railroads and rental car companies dropped, and so did materials companies such as steel and chemical makers. The dollar weakened. Small-company stocks, which stand to benefit the most from Trump’s policy proposals of lower taxes and looser regulations, fell more than the rest of the market.

“President Trump promised that this healthcare bill would be signed, sealed, delivered within the first couple of weeks of him taking office,” said Jack Ablin, chief investment officer for BMO Capital Markets. “All this is doing is pushing the rest of the agenda out.”

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The Standard & Poor’s 500 index tumbled 29.45 points, or 1.1%, to 2,344.02. That was its biggest drop since Oct. 11. The Dow Jones industrial average fell 237.85 points, or 1.1%, to 20,668.01.

The Nasdaq composite slid 107.70 points, or 1.8%, to 5,793.83. The Russell 2000 index of small-company stocks plunged 37.55 points, or 2.7%, to 1,346.55. Four-fifths of the stocks on the New York Stock Exchange fell.

Stocks have fallen four days in a row, though the previous losses were small. Tuesday’s losses were a reversal of the patterns that have endured since Trump was elected in November, but overall stocks are still sharply higher since then.

On Thursday, the House of Representatives is scheduled to vote on the Republican-backed American Health Care Act, and despite Trump’s endorsements it’s not clear if the House or the Senate will approve the bill. The administration hopes to get a major tax reform package to Congress by August, and a big infrastructure spending proposal may follow next year.

Banks had their worst day in nine months as bond prices rose. The yield on the 10-year Treasury note declined to 2.42% from 2.46%. Bank of America sank 5.8% to $23.02. KeyCorp slid 6.5%, to $16.90, the biggest loss in the S&P 500. JPMorgan Chase fell 2.9% to $87.39. Still, banks have done far better than the rest of the market since the election.

Among transportation companies, United Continental fell 3.3% to $65.28 and railroad operator CSX fell 2.7% to $45.62. Hertz Global skidded 8.7% to $19.40. Companies that make steel, chemicals and other basic materials also slid. AK Steel plunged 10.4% to $7.51 and U.S. Steel sank 9% to $33.76.

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Copper also dropped. The metal’s price tends to rise when investors are more optimistic about the economy, and it has risen 14% over the last year. It sank 5 cents, or 1.8%, to $2.62 a pound Tuesday.

Big-dividend companies, especially utilities, did well. Investors often buy those stocks when bond yields are falling. Dominion Resources rose 1.8% to $78.21 and PPL rose 1.8% to $37.47. Some household goods makers also rose. Brown-Forman, the maker of Jack Daniel’s whiskey, climbed 1% to $47.28.

Kate Warne, an investment strategist for Edward Jones, said investors are taking some profits after the market’s long post-election winning streak, but she noted that Wall Street is especially eager for the administration’s tax reform proposals.

“I think investors see [corporate tax reform] as more important in terms of supporting the stock market even if it’s not as important in terms of its effect on the economy” as healthcare, she said.

Food companies fell after General Mills posted a better-than-expected profit but weaker sales. The Cheerios maker faces more competitive pricing and a market that has been shifting demand from processed foods. Its stock slipped 0.8% to $59.76. Kellogg fell 1.8% to $73.60 and Campbell Soup slid 3.2% to $57.09.

Benchmark U.S. crude fell 88 cents, or 1.8%, to $47.34 a barrel. Brent crude, used to price international oils, fell 66 cents, or 1.3%, to $50.96 a barrel. Wholesale gasoline fell 1 cent to $1.61 a gallon. Heating oil fell 1 cent to $1.50 a gallon. Natural gas rose 5 cents, or 1.7%, to $3.09 per 1,000 cubic feet.

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Gold jumped $12.50, or 1%, to $1,246.50 an ounce. Silver rose 15 cents to $17.58 an ounce.

The dollar fell to 111.90 yen from 112.58 yen. The euro rose to $1.0804 from $1.0733.

Germany’s DAX fell 1.1% and the British FTSE 100 lost 0.6%. France’s CAC 40 made big early gains after a debate between the nation’s candidates for president, but it finished down 0.5%. Japan’s benchmark Nikkei 225 slipped 0.3%. The Kospi in South Korea rose 1%, and in Hong Kong the Hang Seng rose 0.4%.

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UPDATES:

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4:05 p.m.: This article was updated with closing prices, context and analyst comments.

1:40 p.m.: This article was updated with the close of markets.

12:25 p.m.: This article was updated with market prices, context and analyst comment.

7:35 a.m.: This article was updated with market prices and context.

This article was originally published at 7:10 a.m.

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