This is supposed to be a big week on Wall Street, with focus on a tax reform plan, a two-day meeting of the Federal Open Market Committee and President Donald Trump’s expected announcement of a new Federal Reserve chair.
But stocks are starting the week off on a sour note as special counsel Robert Mueller’s investigation into Russia’s potential role in the 2016 election is threatening to derail the markets.
On Monday, former Trump campaign chairman Paul Manafort was indicted on charges of conspiracy, tax fraud and money laundering. His longtime associate, Rick Gates, who was also a campaign advisor, also turned himself in. Both pleaded not guilty.
Authorities also announced that George Papadopoulos, a former foreign policy advisor to the campaign, pleaded guilty to lying to the FBI. He is cooperating with investigators.
The Standard & Poor’s 500 index finished Monday down 0.3 percent..
Harris Financial Group managing partner Jamie Cox says any investigation news that doesn’t necessarily threaten Trump’s presidency is good news for the stock market.
“The direct connection to Trump was the key,” Harris says, according to MarketWatch. “And, at this moment, there is none.”
However, investors concerned that indictment worries could distract Republicans from their political plans were selling health care stocks on Monday. The Health Care SPDR (ticker; XLV) exchange-traded fund was down 1 percent on the day.
In addition to fears surrounding the Republican health care agenda, the House is considering a tax cut plan that would dial down corporate tax rates from 35 percent to 20 percent over a five-year period rather than making one large cut in 2018. Republicans are expected to release their plan on Wednesday.
While investors mostly shrugged off the Manafort indictment, the potential delay in tax cuts immediately impacted the market. The Dow Jones industrial average’s low point of the day almost perfectly corresponded with the tax cut news.
Peter Boockvar, chief market analyst at The Lindsey Group, says weakness in small-cap stocks is an indication that investors may be concerned about the tax plan. Bookvar says…
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