Stocks sink early on Washington worries before paring losses

NEW YORK -- Worries that Washington may not be able to help businesses as much as once thought knocked stock indexes down hard early Monday, but they clawed back most of their losses and ended the day mixed.

The Standard & Poor's 500 index fell 2.39 points, or 0.1 percent, to 2,341.59 for its seventh drop in the last eight days.

The Dow Jones industrial average sank 45.74, or 0.2 percent, to 20,550.98, while the Nasdaq composite index rose 11.64, or 0.2 percent, to 5,840.37.

When trading opened for the day, it looked as if losses would be much worse. The S&P 500 sank from the start and was down as much as 0.9 percent.

The weakness followed last week's failure by Republicans to repeal the Affordable Care Act, something they've been pledging to do for years, which raised doubts Washington can push through promises to help businesses.

Investors have been anticipating President Donald Trump and the Republican-led Congress will cut taxes, loosen regulations for companies and institute other corporate-friendly policies.

Indexes recovered most of their losses in the afternoon, largely thanks to gains in hospital and other health-care stocks.

Tax cuts, deregulation and other business-friendly moves still could happen, but even if they don't, the stock market has several pillars of support, said John Manley, chief equity strategist at Wells Fargo Funds Management.

"Trump lucked out when he got elected president, because it was just as earnings were coming out of a two-year slumber," he said. "I think it's been as much, if not more, about earnings as it's been him" behind the 9.4 percent rise for the S&P 500 since Election Day.

An improving economy is translating into bigger profits for businesses, which are set to report their first-quarter results in the coming weeks.

The Federal Reserve, meanwhile, is moving very slowly in raising interest rates and is loath to apply the brakes to the economy too quickly.

"Investors have to acknowledge that a 5 percent correction can happen at any time, and the fact that we haven't had a 1 percent down day for so long is extraordinary," Manley said. "But the things that are usually responsible for a major market decline just don't seem to be in place."

The S&P 500 has lost 1 percent in a day just once since mid-October.

Interest rates fell Monday. The yield on the 10-year Treasury dropped to 2.37 percent from 2.41 percent late Friday. Just a couple of weeks ago, it was above 2.60 percent.

Bank stocks have tracked the movements of Treasury yields recently, because higher interest rates would allow them to charge more for loans and reap bigger profits.

Investors also expected financial companies to be some of the biggest beneficiaries of easier regulations with a Republican-led White House.

Financial stocks in the S&P 500 dropped 0.5 percent, one of the larger losses among the 11 sectors that make up the index.

Morgan Stanley fell 88 cents, or 2.1 percent, to $41.58, and Capital One Financial lost $1.67, or 2 percent, to $82.13.

Hospital stocks were among the strongest performers.

The Republican health-care plan would have resulted in 24 million additional uninsured people in a decade, according to a tally by the Congressional Budget Office. And hospitals take care of patients, whether they're insured or not.