Not too much action took place in Wednesday’s trading in the equities. It seems as if the markets are in a holding pattern, as eyes and ears await the health care vote in the House on Thursday. The Dow closed lower on Wednesday, but missing was the strong sell off we saw on Tuesday. The S&P 500 was able to actually close in positive territory after trading sideways much of the day.
Why the concerns?
The market has enjoyed a nice run up in recent months, largely due to the ideas of less regulation and and tax reform. If Congress does not pass the health care bill on Thursday, it could be viewed as a setback. A no vote would also move tax reform further down the calendar, and concern over other legislation getting through being in jeopardy. The market might not necessarily reverse, but it would have a hard time continuing at its current pace to the upside.
Look for volatility to return after Thursday’s vote. A pass of the bill could see the Dow flirt with 21,000 again on Friday.
John Weyer
Director Commercial Hedging
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