Stock market pressured as bank shares swathed in red

U.S. stocks were pressured on Tuesday as bank shares retreated after major banks reported weak trading numbers, which took the shine off solid earnings from other companies. Investors also grappled with shaky economic reports and the collapse of the Senate health-care bill.

Netflix’s surge on the back of strong earnings was offset by a decline in shares of Goldman Sachs Group Inc.’s GS, -2.29%  stock, which dropped more than 2% after quarterly results that showed a 40% decline in an important segment of trading.

The S&P 500 index SPX, -0.03%  shed 2 points to 2,456 as losses in financials and health care were partly digested by gains in consumer-discretionary and utility sectors.

The Dow Jones Industrial Average DJIA, -0.30% fell 89 points, or 0.4%, to 21,540. The price-weighted gauge was weighed down by Goldman Sachs and Caterpillar Inc.CAT, -1.09%

The Nasdaq Composite Index COMP, +0.34%  bucked the trend to rise 13 points, or 0.2%, to 6,327, above its record close set June 8.

“Investors are taking a pause here as they realize that the failure to pass the health-care bill means the tax reform is delayed. But at the moment, earnings and still growing economy is enough to support equities,” said Diane Jaffee, senior portfolio manager at TCW.

The dollar DXY, -0.54% fell against its main rivals after Republican leaders in the Senate late Monday ditched their effort to repeal and simultaneously replace Obamacare, also known as the Affordable Care Act.

Still, some investors appeared mostly bullish about recent quarterly results and economic environment.

“The market is responding to earnings releases this week, but the bigger picture remains positive: low inflation, low interest rates, weaker dollar and a benign economic environment all bode well for stocks,” said Maris Ogg, president at Tower Bridge Advisors.

She said signs of global strength were also heartening.

“[The] European economy is growing, China is growing and companies are making money, which suggests that earnings growth for next year looks good,” Ogg said.

Despite modest losses on Tuesday, the main indexes were hovering near record levels set last week.

Ogg said the stock market hasn’t been relying on sweeping reforms from President Donald Trump’s administration, including tax cuts, regulation and infrastructure spending, which is why the reaction in equity markets so far to the collapse of the health-care bill has been muted.

“Even though we haven’t seen any specific reforms yet, this administration is still very business-friendly, which has not gone unnoticed by stock investors,” she said.

Nonetheless, strategists have cautioned that the stock market’s upside will be capped unless Trump enacts the pro-growth policies he had pledged, including an overhaul of the tax system.