Stocks falter after long-awaited Comey testimony

Stocks gave up earlier gains Thursday as Wall Street interpreted former FBI Director James Comey’s testimony as less damaging to President Donald Trump than feared.

The Dow was down 30 points after rising more than 80. The S&P 500 was off by 0.15 percent, also giving up earlier gains. The Nasdaq advanced less than 0.1 percent, off a session record intraday high.

In his testimony, Comey said he kept records of his conversations with Trump — something he did not do when Barack Obama was president — because he thought Trump might lie.

“Investors are not spooked by this at all,” said Eric Aanes, president and founder of Titus Wealth Management. “The only thing that could be an issue is [potential] delays into tax cuts.”

Traders listened closely as they assessed how damaging Comey’s remarks might be for President Donald Trump and whether he can implement his pro-growth agenda. “That’s really what the market cares about,” said Robert Pavlik, a chief market strategist at Boston Private Wealth.

Expectations for tax reform, deregulation and infrastructure spending were a key catalyst for stocks after Trump’s election. But uncertainty about the implementation of those measures has grown with time as the Trump administration is forced to put out one fire after another.

The Senate Intelligence Committee released Comey’s written testimony on Wednesday, in which Comey said he believed Trump wanted him to “drop” an investigation into former National Security Advisor Michael Flynn’s ties to Russia.

“The release of Comey’s opening statement for his Thursday testimony late in the day by the Senate intelligence committee was a major event and was interpreted as risk-positive by the market since (according to our read) it did not appear to offer a smoking gun against the administration,” Ian Lyngen, head of U.S. rate strategy at BMO, said in a note.

Bond yields rose slightly, with the benchmark 10-year note yield held near 2.209 percent, while the two-year note yield traded near 1.33 percent.

Larry McDonald, head of the U.S. macro strategies at ACG Analytics, said bonds could see a sharp downturn, however. “There’s clearly not enough there, so bonds likely sell off hard,” he said.

Wall Street also digested news coming from Europe, as the European Central Bank kept interest rates unchanged. The ECB dropped all references to a future rate cut from its statement but added that it would be ready to extend its quantitative easing (QE) program if needed. The euro fell 0.4 percent to $1.122 against the dollar.

Also in Europe, voters in the United Kingdom made their way to the polls for a general election. Prime Minister Theresa May called for the election in April. Seven weeks ago, May’s Conservative party had a seemingly unassailable lead over the left-wing Labour party, but that lead has narrowed significantly since then.

Fred Imbert

CNBC’s Jacob Pramuk and Karen Gilchrist contributed to this report.

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