Finance

Immigration Ban Sparks Rough Day For Stock Market

| by Lauren Briggs

Stock markets in the U.S. and abroad took a hit after President Donald Trump signed an executive order restricting travel and immigration, ending the market's steady rise since he won the election.

The Dow Jones Industrial Average .DJI dropped 122.65 points (0.61 percent) to 19,971.13, the S&P 500 .SPX sunk 13.79 points (0.60 percent) to 2,280.9, and the Nasdaq Composite .IXIC fell 47.07 points  (0.83 percent) to 5,613.71, reports Reuters.

Experts say that Trump's controversial order, which halts the refugee program, blocks immigration from seven countries with Muslim majorities, and indefinitely suspends admittance to all refugees from Syria, sparked a "risk-off" response that hurt U.S. stocks, as well as worldwide financial markets and equities, reports Market Watch. Meanwhile, the value rose for market alternatives such as gold, the Japanese yen and U.S. Treasury, as the market dropped significantly, though not fatally. Analysts say this should be a warning to investors getting too comfortable in assuming Trump's pro-growth agenda will automatically trigger economic prosperity.

"We're just a few days into this presidency and yet virtually all our clients have expressed concern the Trump White House has spent way too much political capital forging ahead with a wall across Mexico's border and on defending the order to block U.S. entry of immigrants from several Muslim countries," The Economic Outlook Group's chief global economist Bernard Baumoh wrote, according to MarketWatch.

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Indeed, some economic analysts say that Trump's tax cuts and other policies that could boost the market might suffer if he focuses too much on trade, immigration and health care, which could harm the market and make it more difficult for him to enact widespread deregulation and infrastructure improvement.

"For these current market prices to be justified, the Trump agenda must unfold perfectly," Cumberland Advisors' chairman and chief investment officer David Kotok said in a note. "But the reverse is under way, and fragmented policy combined with obfuscation is now a growing detriment to growth acceleration."

However, if Trump pulls off the correct balance, both the economically positive policies as well as the financially riskier ones, the market could prove even more beneficial for investors.

"Consequently, these pullbacks due to uncertainties are likely to be opportunities to buy, especially sectors that are leveraged to the normalization of interest rates and the economy's growth -- industrials, consumer discretionary, and financials," analysts from the Wells Fargo Investment Institute analysts explained.

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Sources: MarketWatch, Reuters / Photo Credit: htmvalerio/Flickr

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