U.S. equities and stock exchange traded funds were stuck in mixed action Monday as hurdles on Capitol Hill stalls President Donald Trump’s policy agenda and traders wait on corporate results.
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 Monday.
Observers kept an eye on Washington where Jared Kushner answered questions before a Senate committee as the Trump administration’s agenda hits a roadblock, Bloomberg reports.
Investors are also wary of further surprises out of Washington as the administration faces a widening Russia probe. Kushner confirmed four contacts with Russians during his father-in-law’s presidential campaign and the transition but described it as unmemorable.
The ongoing drama, along with the failed attempt to repeal the Affordable Care Act or so-called Obamacare, have stalled the pro-growth economic agenda that President Trump has promised.
Meanwhile, the earnings season is still in full swing, with market’s slipping in early trading Monday on Johnson & Johnson (NYSE: JNJ) after South Korea’s Samsung Bioepis said it started U.S. sales of the company’s top selling drug Remicade, Reuters reports.
On the other hand, technology stocks and the Nasdaq strengthened ahead of Alphabet (NasdaqGS: GOOGL) earnings report.
“This week is going to be critical to see the passing of the baton from the Fed being the primary driver of the market to corporate fundamentals,” Matt Miskin, senior capital markets research analyst at John Hancock Investments, told Reuters.
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Analysts have raised their projections for S&P 500 earnings to 8.8%, compared to an 8% increase expected at the start of July, according to Thomson Reuters.
“For now, better earnings is giving the market the ability to navigate some of the uncertainty that is coming out of Washington. But going into next year, the market is likely to become more concerned if policies do not finally come through,” Miskin added.
The Federal Reserve is also slated to meet this week. While economists don’t expect a change in the Fed funds target rate, the central bank could reveal plans to reduce its trillion dollar balance sheet.
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