Veteran strategist Byron Wien warns that the stock market could be “vulnerable to a correction” because of all of the political chaos.
"One question that has to be raised by the failure to pass the health care bill is whether there is too much anarchy in Congress for any major legislation to get through in spite of the Republican majority,” Wien wrote for Barron’s.
“This has to make one a little apprehensive about how quickly the economy will improve to the 3% growth level. This could put my estimate of earnings for the Standard & Poor’s 500 in jeopardy and mean that the stock market is ahead of itself and vulnerable to a correction,” wrote Wien, vice chairman of Blackstone Advisory Partners, a subsidiary of the Blackstone Group.
U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost, the Commerce Department said. Gross domestic product increased at a 2.1 percent annualized rate instead of the previously-reported 1.9 percent pace, Reuters reported.
A record-setting rally for stocks in the wake of President Donald Trump's November election stalled somewhat this month, with some investors pointing to risks to Trump's agenda, including tax reform, after his fellow Republicans failed to pass a healthcare bill.
“I still think higher highs are ahead of us, but they may occur later than I originally thought. It will also be important to see how Donald Trump deals with legislative adversity, disagreements with foreign leaders over trade and defense, and geopolitical confrontation (North Korea). These factors will play a critical role in investor attitudes and market performance,” Wien said.
“We all knew that progress would be slow and frustrating in Washington, but it is especially daunting for a president who is impatient and new to the political process. But the American people can also be impatient. They voted for him because they were tired of a government that accomplished little and they yearned for change," Wien wrote.
"The longer change is delayed, the more dissatisfied the electorate is likely to be. Campaigning, with its roaring crowds and debate confrontations, is finite and easy. Governing, with its frequent meetings and continuous negotiations, is endless and hard.”
Meanwhile, others are a bit more optimistic.
The GDP report is "basically an affirmation that, hey, at the end of the day, Washington will do and say whatever they are going to do, but the economy is marching forward," said Karyn Cavanaugh, senior market strategist at Voya Investment Management in New York.
"It’s not just the U.S. economy, but we do see definitely improvement throughout the world," Cavanaugh said.
(Newsmax wire services and the AP contributed to this report).