Fears of delays to Trump tax cuts hit Wall Street

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Wall Street fell sharply on Tuesday as investors worried that President Donald Trump will struggle to deliver promised tax cuts that propelled the market to record highs in recent months, with nervousness increasing ahead of a key healthcare vote. The S&P 500 and Dow Jones Industrial Average lost around 1 percent and were on track for their worst one-day percentage declines since before Trump's election victory in November. The S&P financial index . SPSY dropped 2.47 percent and was heading for its biggest daily fall since June. That added to losses in the sector since the Federal Reserve last week raised interest rates by 25 basis points and signaled it would remain on a gradual pace of hikes, a less aggressive stance than some investors expected. Banks benefit from higher interest rates and their stocks are sensitive to changes in expectations of how quickly the Fed will change rates. Bank of America (BAC. N) slumped 5.48 percent, the biggest drag on the S&P 500, while a 2.98 percent drop in Goldman Sachs (GS. N) pulled the Dow lower."There was a feeling the Fed was going to possibly be more hawkish last week. That didn't happen," said Mark Kepner, managing director at Themis Trading in Chatham, New Jersey. "That takes a little out of the higher rates that the banks want." Benchmark 10-year U.S. Treasuries US10YT=RR were last up 10/32 in price to yield 2.44 percent, the lowest yield since March 1.

Republican party leaders aim to move controversial healthcare legislation to the House floor for debate as early as Thursday. But they can only afford to lose about 20 votes from Republican ranks, or risk the bill failing, since minority Democrats are united against it. With valuations stretched, investors see the Trump administration's struggles to push through the healthcare overhaul as a sign he may also face setbacks delivering promised corporate tax cuts. Expectations of those tax cuts are a major reason for the 10-percent surge in the S&P 500 since Trump's election in November. "The market is starting to get a little fed up with the lack of progress in healthcare because everything else is being put on the back burner," said RJ Grant, head of trading at Keefe, Bruyette & Woods in New York.

The Russell 2000 index of smallcap stocks was down 2.13 percent, on pace for its worst day since September. The financial sector has been the best performing of the 11 major S&P sectors since Trump's election, surging nearly 20 percent on his proposals to cut bank regulations and reduce taxes. The Dow Jones Industrial Average . DJI was down 0.97 percent at 20,702.71 points, while the S&P 500 . SPX lost 1.05 percent to 2,348.52. The Nasdaq Composite . IXIC dropped 1.49 percent to 5,813.39.

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Google to revamp policies, hire staff after UK ad scandal LONDON Google vowed on Tuesday to police its websites better by ramping up staff numbers and overhauling its policies after several companies deserted the internet giant for failing to keep their adverts off hate-filled videos.

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