U.S. equities and stock exchange traded funds dipped Tuesday after hitting record highs as weak economic data and political risks weigh on sentiment.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.1% lower Tuesday.
Pressuring U.S. markets, real estate companies in the S&P 500 fell 0.5% and were among the worst performers Tuesday after data revealed U.S. new-home construction decreased in April for the third time in four months, the Wall Street Journal reports.
Moreover, there is some growing concern over political risks in wake of Trump’s perceived association with Russia and his ability to pass through policy changes, notably the chances of tax cuts, which many hope will bolster earnings. Speculation on lower tax rates under the Trump administration fueled the recent U.S. market rally.
“In terms of potential implications for the markets, finding support in Congress for fiscal measures may prove even more difficult for President Donald Trump if the latest reports undermine his relationship with the Republicans,” Piotr Matys, foreign-exchange strategist at Rabobank, told the WSJ, referring to reports that the president shared sensitive intelligence obtained from a close U.S. ally with Russia’s foreign minister and ambassador.
Nevertheless, markets still anticipate further economic growth to fuel gains. Bank of America Merrill Lynch sees expectations for global profits are at a three-year high, with over half of fund managers estimating results to improve over the next 12 months.
“As long as we have growth, whether it is earnings or economic data, the markets are likely to be able to take such (political) headlines in stride,” Matt Miskin, senior capital markets research analyst at John Hancock Investments, told Reuters.
For more information on the markets and U.S. Stock ETFs, visit our S&P 500 category.