US stocks slipped about 1 percent on Tuesday as investors worried about the potential impact of President Donald Trump’s abrupt withdrawal of the United States from the global accord to fight climate change and the prospect of the country-specific tax cuts promised by his predecessor.
The declines came after the S&P 500’s biggest two-day rally since September as investors took advantage of the good news in recent weeks to book profits. The White House said on Tuesday that Trump will follow through on a pledge to pull the United States from the 2015 Paris climate accord, despite internal objections from his political advisors and global condemnation.
The decline is modest compared with the S&P’s 3.5 percent decline for the week ahead of the announcement, but it is a reminder of how investors have priced in expectations for a pro-business administration. “We didn’t expect Trump to pull out of Paris. The market was very optimistic about the good things he was going to do. So now people are questioning whether these tax cuts are real or not,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. As a candidate, Trump had vowed to push ahead with his campaign pledge to slash taxes on businesses, but there has been widespread speculation that he will not be able to follow through on that campaign promise.
Stocks of energy companies fell as oil prices tumbled to three-week lows after the Paris decision, which calls into question growth prospects for the energy sector. The S&P 500 energy sector was down 2.7 percent, its biggest drop since January 4. At 2:45 pm ET, the Dow Jones Industrial Average was down 0.88 percent at 20,663.55 points and the S&P 500 had lost 1.11 percent to 2,357.02.