U.S. stocks and the dollar were sold on Monday, following a decision by Republican House Speaker Paul Ryan late Friday to pull the American Health Care Act from consideration, after it became clear that the legislation did not have the support of lawmakers required to pass. Members of the conservative Freedom Caucus, who believe that the bill did not go far enough cutting new benefits available for the first time to 25 million Americans under the Affordable Care Act, colloquially known as Obamacare, are said to be behind a lack of conservative support for the bill.

The Dow Jones Industrial Average was off by 46.19 points, or 0.22 percent, at 2:15 p.m. ET. The U.S. dollar was $0.0058 lower, or 0.63 percent, crude oil was down $0.36, or 0.75 percent, and gold was up by $5.40, or 0.43 percent. The yield on the 10-year T-note was down by 3 basis points, or 1.04 percent, to 2.37 percent.

Earlier this morning, Dow futures had been lower by more than 135 points, and were described as having "come off the bottom," by Steven Wieting, chief strategist with Citi Private Bank. He spoke of observed expectations among investors last week that a failure on the part of the House of Representatives to pass the AHCA would be a significant negative for markets, but expressed that a "good deal of the damage" was already baked into prices by the close of trading on Friday.

Market seen questioning size of fiscal stimulus

Mr. Wieting stated that a key question before the market now is whether or not the tax benefits associated with the AHCA are still in play, and whether they will be "smaller in scope." The Citi analyst was questioned with regard to the yield of the 10-year T-note falling in sympathy with equities today, and through last week's drop in stocks, the "worst week of 2017." He responded that the bond market is "taking back expectations" that it had gained for "massive fiscal stimulus," after promises were made by President Donald Trump.

The chief strategist described the market holding an "unreasonable view" that no obstacles would be encountered with the president's fiscal stimulus plans. Wieting observed "low volatility" in the markets following the president's election, along with significant price gains, confidence, which he stated, "surprised" him.

U.S. dollar weakness ahead?

Wieting also described it being a "surprise" that gridlock has resulted in Congress over the AHCA, given that the House is controlled by the Republican Party, but expressed that "significant tax reforms" are still likely. He expressed that legislation to repatriate "unretained foreign profits" as potential "lowest hanging fruit," and a likely target for tax reform; one which Democrats would probably vote in favor of. The Citi analyst voiced the opinion that recent strength in the U.S. dollar on the heels of the election of President Trump is occurring "very late in a cycle," and expressed his view that the dollar may take a backseat to strength in the currencies of other countries, after six years of markups.

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