The foundational legislative reform underpinning the political agenda of the presidency of Donald J. Trump - the repeal and replacement of Obamacare - imploded Friday, shattering the administration's ambitions and casting doubt on its ability to deliver on its promise to slash taxes.
Rather than suffer a humiliating loss at the hands of his own party, House Speaker Paul D. Ryan (R-Wisconsin) cancelled a vote by the House of Representatives scheduled for Friday afternoon.
Pulling the Republican proposal to replace the Affordable Care Act was a major political defeat for the swashbuckling Mr. Trump and is expected to delay his promise to enact tax cut legislation. However, the tax cut was predicated on spending cuts to Medicaid from the Republican replacement of Obamacare.
With no revenue coming from replacing Obamacare now and Mr. Ryan committed only to supporting a tax cut that does not increase the federal budget deficit, Mr. Ryan on Friday said tax reform will be more difficult but was "not impossible."
The collateral damage on Friday afternoon did not extend to the stock market. The Standard & Poor's 500 closed Friday at 2,343.98, down by just a fraction for the day and by 1.4% for the week.
Despite the stunning turn of events on Friday, the S&P 500 held on to a 10% surge in the 17 weeks following the election. Major benchmarks of corporate America's value are still hovering near their recently achieved all-time high, largely because the economy has been repeatedly surprising investors with better than expected data for months on consumer income and spending and strong leading economic indicators.
No one can reliably predict the stock market's next nosedive, however, and the strength of the economy could continue to surprise on the upside and propel stock prices to new heights. Stock prices have been stable despite whiplash-inducing economic and political news, and it's wise in times like these to brace yourself for a drop.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.
Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.