U.S. stocks edged higher Thursday ahead of a planned vote on a health-care bill that many investors say could test the viability of the Trump administration’s agenda.
Major indexes started the day with losses, then rose in choppy trade as the outcome around a Republican plan to dismantle the Affordable Care Act remained uncertain.
Many investors and analysts have said the vote will be a key test of whether President Donald Trump will be able to push through potential policy changes like tax cuts, fiscal stimulus and deregulation—hopes for which have helped stocks rally since the election. As of Thursday afternoon, Republican lawmakers remained short of the votes needed to pass their health plan in the House of Representatives.
“There’s a consensus that this bill will be a referendum on the entire Trump agenda,” said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Mont. “It’s bringing up the question of whether the president’s tax cuts and spending will go through as expected.”
The Dow Jones Industrial Average gained 66 points, or 0.3%, to 20727, on track to snap a five-session losing streak. The S&P 500 added 0.3%, and the Nasdaq Composite rose 0.3%.
Stocks that were among the biggest decliners in the selloff earlier this week led gains Thursday.
Shares of financial companies in the S&P 500 rose 0.7%, with Bank of America up 1.1% and Morgan Stanley up 1%.
Industrial stocks, which investors have bet would benefit from Mr. Trump’s plans to boost infrastructure spending, added 0.2%.
Stocks of small companies, which many investors thought would benefit most from Mr. Trump’s potential policies, rose Thursday. The Russell 2000 index of small-capitalization companies added 0.8%.
Government bonds weakened, with the yield on the 10-year U.S. Treasury note rising to 2.418%, according to Tradeweb, from 2.398% Wednesday. Yields rise as bond prices fall.
The dollar stabilized after falling to its lowest level since November on Wednesday. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up less than 0.1%.
Some analysts and investors cautioned that the risks of profit-taking over the next few weeks are heightened. Stock valuations are at historically high levels and major indexes remain close to records.
“Things have been priced to perfection on the policy front, but we know it’s not going to be smooth sailing,” said Bret Chesney, senior portfolio manager at Alpine Global. “We were ahead of ourselves after the election and I think we’re still ahead of ourselves now.”
Elsewhere, European stocks rallied, with the Stoxx Europe 600 index last up 0.8% as shares of health-care and construction companies rallied.
Stocks in Asia closed higher. Japan’s Nikkei Stock Index rose 0.2%, snapping a three-session losing streak. South Korea’s Kopsi Index gained 0.2% and Australia’s S&P/ASX 200 added 0.4%.
