Wall St falls the most this year as Trump honeymoon sours

NEW YORK, Jan 30 (Reuters) - Major U.S. stock indexes posted their largest drop so far in 2017 on Monday as investors worried that a curb on immigration ordered by Donald Trump was a reminder that some of the U.S. president's policies are not market-friendly.

An executive order issued by Trump on Friday banned immigration from seven Muslim-majority countries, including legal residents and visa holders, and temporarily halted the entry of refugees. Over the weekend, thousands of people rallied in major U.S. cities and at airports in protest.

U.S. equities had hit a series of record highs following Trump's election in November, encouraged by his promise of tax cuts and simpler regulations.

"Investors focused on the pro-growth of (Trump's) proposals and not those detrimental to economic activity, like protectionism," said Peter Cardillo, chief market economist at First Standard Financial in New York.

He said investors wore blinders to only see the market-friendly policies Trump spoke about during the campaign and the immigration ban was a reminder of actions he could take that could undermine the economy.

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Protests erupt throughout US cities over Trump immigration ban
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Protests erupt throughout US cities over Trump immigration ban
Demonstrators gather in Copley Square for the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" to protest U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
An international traveler smiles as she walks past the protest against the travel ban imposed by U.S. President Donald Trump's executive order, at Dallas/Fort Worth International Airport in Dallas, Texas, U.S. January 29, 2017. REUTERS/Laura Buckman
Demonstrators yell slogans during protest against the travel ban imposed by U.S. President Donald Trump's executive order, at Los Angeles International Airport in Los Angeles, California, U.S., January 29, 2017. REUTERS/Ted Soqui
Sarah Ijaz joins the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" to protest U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
BOSTON - JANUARY 29: People hold signs as they march from Copley Square to the Mass. State House in Boston on Jan. 29, 2017, to protest President Donald Trump's executive order banning people from several predominantly Muslim countries from entering the country. (Photo by Jessica Rinaldi/The Boston Globe via Getty Images)
Muslim women pray during the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" protesting U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
People gather to pray in baggage claim during a protest against the travel ban imposed by U.S. President Donald Trump's executive order, at Dallas/Fort Worth International Airport in Dallas, Texas, U.S. January 29, 2017. REUTERS/Laura Buckman
Eight year-old Esma, an Irish-Moroccan-American, prays with other Muslim women during the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" protesting U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
Demonstrators spell out "# No Muslim Ban" during the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" to protest U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
Izzy Berdan (R) joins the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" to protest U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
Muslim women pray during the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" protesting U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
Muslim women pray during the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" protesting U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
Demonstrators gather in Copley Square for the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" to protest U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
An activist holds a sign outside the White House to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
Activists gather outside the White House to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
Activists gather outside the White House to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
Activists gather outside the White House to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
Samah Mansur, from Egypt, takes part in the "Boston Protest Against Muslim Ban and Anti-Immigration Orders" to protest U.S. President Donald Trump's executive order travel ban in Boston, Massachusetts, U.S. January 29, 2017. REUTERS/Brian Snyder
Activists gather outside the White House to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
People gather to protest against the travel ban imposed by U.S. President Donald Trump's executive order, at First Baptist Church in Dallas, Texas, U.S., January 29, 2017. REUTERS/Laura Buckman
BOSTON - JANUARY 29: People hold signs as they gather in Copley Square in Boston on Jan. 29, 2017, to protest President Donald Trump's executive order banning people from several predominantly Muslim countries from entering the country. (Photo by Jessica Rinaldi/The Boston Globe via Getty Images)
BOSTON - JANUARY 29: People gather in Copley Square in Boston on Jan. 29, 2017, to protest President Donald Trump's executive order banning people from several predominantly Muslim countries from entering the country. (Photo by Jessica Rinaldi/The Boston Globe via Getty Images)
UNITED STATES - JANUARY 29: Rep. Don Beyer, D-Va., speaks with an ACLU legal observer during the protest at Dulles International Airport in Virginia on Sunday, Jan. 29, 2017. Protests erupted at airports around the country following President Trump's executive order restricting travel from several Islamic countries. (Photo By Bill Clark/CQ Roll Call)
MIAMI, FL - JANUARY 29: A protester holds up a sign that reads, 'Banning Immigrants is UnAmerican!,' as she stands with others at the Miami International Airport against the executive order that President Donald Trump signed clamping down on refugee admissions and temporarily restricting travelers from seven predominantly Muslim countries on January 29, 2017 in Miami, Florida. Demonstrators gathered at airports across the country in protest of the order. (Photo by Joe Raedle/Getty Images)
MIAMI, FL - JANUARY 29: Protesters stand together at the Miami International Airport against the executive order that President Donald Trump signed clamping down on refugee admissions and temporarily restricting travelers from seven predominantly Muslim countries on January 29, 2017 in Miami, Florida. Demonstrators gathered at airports across the country in protest of the order. (Photo by Joe Raedle/Getty Images)
MIAMI, FL - JANUARY 29: Susan Barimo joins with other protesters as they stand together at the Miami International Airport against the executive order that President Donald Trump signed clamping down on refugee admissions and temporarily restricting travelers from seven predominantly Muslim countries on January 29, 2017 in Miami, Florida. Demonstrators gathered at airports across the country in protest of the order. (Photo by Joe Raedle/Getty Images)
People gather outside Terminal 4 during a protest against Donald Trump's travel ban at John F. Kennedy International Airport in Queens, New York, U.S., January 29, 2017. REUTERS/Andrew Kelly
International travelers walk past protestors holding signs as they protest against the travel ban imposed by U.S. President Donald Trump's executive order, at Dallas/Fort Worth International Airport in Dallas, Texas, U.S. January 29, 2017. REUTERS/Laura Buckman
Protesters at Discovery Green Park during Super Bowl events in Houston, Texas, U.S., January 29, 2017. REUTERS/Trish Badger
Dozens of pro-immigration demonstrators cheer and hold sign as international passengers arrive at Dulles International Airport, to protest President Donald Trump's executive order baring visitors, refugees and immigrants from certain countries to the United States, in Chantilly, Virginia, in suburban Washington, U.S., January 29, 2017. REUTERS/Mike Theiler
Activists march to the US Capitol to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein TPX IMAGES OF THE DAY
Activists march to the US Capitol to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
Activists gather at the US Capitol to protest President Donald Trump's executive actions on immigration in Washington January 29, 2017. REUTERS/Aaron P. Bernstein
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Technology, a sector which has openly opposed bans on immigration and hurdles to hiring foreign talent, weighed the most on the S&P 500.

The Dow Jones Industrial Average fell 122.65 points, or 0.61 percent, to close at 19,971.13, the S&P 500 lost 13.79 points, or 0.60 percent, to 2,280.9 and the Nasdaq Composite dropped 47.07 points, or 0.83 percent, to 5,613.71.

It was the largest daily percentage drop for the Dow since October, while the S&P and Nasdaq dropped the most since late December.

Earlier, Trump signed an executive order that would seek to pare back federal regulations by requiring agencies to cut two existing regulations for every new rule introduced.

In an event with small business leaders, Trump took credit for the market rally since Nov. 8:

"The stock market has gone up massively since the election. Everyone's saying 'Oh, the market will go down.' I said 'The market's not going down'."

The Russell 2000 index of small and mid-cap companies fell 1.3 percent Monday, giving back all of January's gains.

The CBOE Volatility index or Wall Street's "fear gauge" rose 1.30 points, the most for any day since Nov. 3.

Stocks fell even as U.S. consumer spending accelerated and a measure of pending home sales rose in December, pointing to sustained domestic demand that could spur economic growth in early 2017.

"Non-economic factors are starting to enter the fray to the detriment of the positive story equity market participants have been anticipating," said Washington, DC-based Wayne Wicker, chief investment officer at retirement plan manager firm ICMA-RC, which says holds about $36 billion in assets under management.

Airline stocks fell, with American Airlines down 4.4 percent and United Continental down 3.6 percent. At least one analyst cited worries over the travel ban to the United States.

"The concern is that (Trump's) travel ban starts to encompass more countries or that there are more stringent restrictions on travel to the U.S.," or other countries retaliate, said Stifel analyst Joseph DeNardi.

Delta, which suffered a systems outage that grounded about 280 flights between Sunday and Monday, fell 4.1 percent.

Also in investors' crosshairs: a Federal Reserve's policy meeting that begins Tuesday, corporate earnings from key companies such as Apple and Facebook and a raft of economic data including Friday's jobs report.

The S&P 500 posted five new 52-week highs and five new lows; the Nasdaq Composite recorded 49 new highs and 42 new lows.

About 6.67 billion shares changed hands in U.S. exchanges, just above the 6.65 billion daily average over the last 20 sessions. (Reporting by Rodrigo Campos Additional reporting by Lewis Krauskopf in New York and Ayesha Rascoe in Washington; Editing by Nick Zieminski and James Dalgleish)


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Markets

DJIA 21,899.89 196.14 0.90%
NASDAQ 6,297.48 84.35 1.36%
S&P 500 2,452.51 24.14 0.99%
NIKKEI 225 19,434.64 50.80 0.26%
HANG SENG 27,401.67 246.99 0.91%
DAX 12,199.46 -29.88 -0.24%
USD (per EUR) 1.18 0.00 0.32%
USD (per CHF) 0.97 0.00 -0.33%
JPY (per USD) 109.08 -0.65 -0.59%
GBP (per USD) 1.28 0.00 -0.12%

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