Jun E-mini S&Ps (ESM17 -0.80%) this morning are down sharply by -0.82% at a 1-1/2 month low after Friday’s failure by House Republicans to pass their health-care bill bolstered concern that the Trump administration will be unable to pass its pro-growth tax reform and infrastructure spending plans. European stocks are down -0.33%, although losses were contained after the German Mar IFO business climate rose more-than-expected to a 5-1/2 year high. Doubts that the Trump administration will be able to enact its pro-growth agenda has also undercut the dollar index which slumped to a 4-1/2 month low and boosted demand for gold with Apr COMEX gold (GCJ17 +0.78%) up +0.70% at a 3-1/2 week high. Asian stocks settled lower: Japan -1.44%, Hong Kong -0.68%, China -0.08%, Taiwan -0.26%, Australia -0.12%, Singapore -0.51%, South Korea -0.69%, India -0.63%. Japan’s Nikkei Stock Index fell to a 1-1/2 month low, led by losses in exporting stocks, as the decline in global equity markets fueled a surge in safe-haven demand for the yen with USD/JPY down -0.90% to a 4-1/4 month low, which undercuts Japanese exporters’ earnings prospects.

The dollar index (DXY00 -0.59%) is down -0.51% at a 4-1/2 month low. EUR/USD (^EURUSD) is up +0.62% at a 3-1/2 month high. USD/JPY (^USDJPY) is down -0.90% at a 4-1/4 month low.

Jun 10-year T-note prices (ZNM17 +0.23%) are up +7 ticks at a 1-month high on increased safe-haven demand from the slide in global stocks.

Former Atlanta Fed President Dennis Lockhart said the Fed mas room for two more interest rate increases this year as the economy seems “reasonably close” to full employment and is likely to gather pace. He added, that as the Fed tightens, they will also begin a “natural but slow’ shrinking of the balance sheet with a final size probably between $ 1 trillion and $ 2 trillion.

The German Mar IFO business climate rose +1.2 to 112.3, stronger than expectations of +0.1 to 111.1 and a 5-1/2 year high.

Key U.S. news today includes: (1) Mar Dallas Fed manufacturing activity (expected -2.5 to 22.0, Feb +2.4 to 24.5), (2) Treasury auctions $ 26 billion of 2-year T-notes, (3) Chicago Fed President Charles Evans (voter) speaks on current economic conditions and monetary policy at a Global Interdependence Center event in Madrid, (4) Dallas Fed President Robert Kaplan (voter) takes part in “A Discussion of Economic Conditions and the Role of Monetary Policy” at Texas A&M University, (5) USDA weekly grain export inspections.’

Notable Russell 1000 earnings reports today include: Red Hat (consensus $ 0.61)

U.S. IPO’s scheduled to price today: none.

Equity conferences: Scotia Howard Weil Energy Conference on Mon-Tue, Barclays Materials ROC Stars Conference on Tue, Jefferies Animal Health Summit on Thu.

Cal-Maine (CALM +0.13%) reported Q3 EPS of 9 cents, weaker than consensus of 19 cents.

KB Home (KBH +1.50%) was downgraded to ‘Market Perform’ from ‘Outperform’ at JMP Securities.

Snap (SNAP -1.69%) jumped 5% in pre-market trading after it was initiated with an ‘Overweight’ at Morgan Stanley with a price target of $ 28.

Best Buy (BBY +0.52%) was upgraded to ‘Overweight’ from ‘Neutral’ at Piper Jaffray with a price target of $ 55.

Edwards Lifesciences (EW +1.37%) was upgraded to ‘Outperform’ from ‘Neutral’ at Evercore ISI with a price target of $ 110.

Sanderson Farms (SAFM +1.24%) was upgraded to ‘Overweight’ from ‘Sector Weight’ at KeyBanc Capital Markets with a price target of $ 120.

Illinois Tool Works (ITW -0.50%) was downgraded to ‘Hold’ from ‘Buy’ at Stifel who cut their price target on the stock to $ 104 from $ 135.

PrivateBancorp (PVTB -0.50%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Keefe, Bruyette & Woods with a target price of $ 63.

DSW Inc (DSW +0.68%) rose over 2% in after-hours trading after it was announced that it will replace Texas Capital Bancshares in the S&P MidCap 400 before the opening of trade on Wednesday, March 29.

Michaels Cos (MIK +0.78%) gained nearly 3% in after-hours trading after it was announced that it will replace Wisdomtree in the S&P MidCap 400 before the opening of trade on Wednesday, March 29.

Weatherford International (WFT +0.34%) rallied over 5% in after-hours trading after it formed a joint-venture with Schlumberger to deliver completions products and services for unconventional resource plays in U.S. and Canadian land markets,

Jun E-mini S&Ps (ESM17 -0.80%) this morning are down -19.25 points (-0.82%) at a 1-1/2 month low. Friday’s closes: S&P 500 -0.08%, Dow Jones -0.29%, Nasdaq +0.17%. The S&P 500 on Friday closed lower on the cancelation of Friday’s vote in the House of Representatives on the Republican health-care bill due to lack of support. Stocks were also undercut by the unexpectedly weak -0.1% decline in U.S. Feb capital goods new orders non-defense ex-aircraft, a proxy for capital spending, and by the -0.8 point decline in the U.S. Mar Markit manufacturing PMI to a 5-month low of 53.4, weaker than expectations of +0.6 to 54.8. Stocks found support on strength in technology stocks, led by a 7% surge in Micron Technology, after it gave better-than-expected forward guidance. Stocks were also supported by comments from New York Fed President Dudley who said, the “good news is the economy is at a pretty good place right now.”

Jun 10-year T-notes (ZNM17 +0.23%) this morning are up +7 ticks at a 1-month high. Friday’s closes: TYM7 -4.00, FVM7 -1.00. Jun 10-year T-notes on Friday closed higher on the failure of Republicans to pass their health-care bill, which boosted safe-haven demand for T-notes. T-notes were also boosted by dovish comments from St. Louis Fed President Bullard who said that three rate hikes this year are “potentially overkill.”

The dollar index (DXY00 -0.59%) this morning is down -0.504 (-0.51%) at a 4-1/2 month low. EUR/USD (^EURUSD) is up +0.0067 (+0.62%) at a 3-1/2 month high and USD/JPY (^USDJPY) is down -1.0 (-0.90%) at a 4-1/4 month low. Friday’s closes: Dollar index -0.133 (-0.13%), EUR/USD +0.0015 (+0.14%), USD/JPY +0.40 (+0.36%). The dollar index on Friday fell to a 1-3/4 month low and closed lower on the failure of Republicans to pass their health-care bill, which raised some doubts about the rest of the Republican agenda. There was also strength in EUR/USD after the Eurozone Mar Markit manufacturing PMI unexpectedly rose +0.8 to 56.2, the fastest pace of expansion since the data series began in 2014.

May WTI crude oil prices (CLK17 -0.81%) this morning are down -35 cents (-0.73%) and May gasoline (RBK17 -0.34%) is -0.0030 (-0.19%). Friday’s closes: May crude +0.27 (+0.57%), May gasoline +0.0141 (+0.88%). May crude oil and gasoline on Friday closed higher on a weaker dollar and on talk that OPEC talks on Sunday might include a discussion about whether to extend the OPEC production-cut agreement into the second half of the year. Crude oil prices were undercut by concern that U.S. crude output may increase after Baker Hughes reported that U.S. active oil rigs rose +21 in the week ended Mar 24 to 652, the most in 1-1/2 years.