The Trump trade has turned into a Trump tantrum. The uproar over President Donald Trump's travel ban on seven countries is making markets anxious, and traders are worried the policy will create divides among Republicans and divert attention from the Trump policies that pushed stocks higher, like tax cuts and increased fiscal spending. They also worry it rings of a more protectionist tone that could be echoed in trade policy. "If you say the market is 30 percent driven by fundamentals and 70 percent driven by the hopes and promises of the big three — tax cuts, infrastructure spending and deregulation, then the big three just got harder," said Art Hogan, chief market strategist at Wunderlich Securities. "If things continue to get messy in Washington, that process is going to take longer. That's what we're dealing with today." Stocks were broadly lower Monday, with the and Dow off as much as 1 percent in their worst sell-off since Oct. 11. The dollar was weaker and Treasury yields moved lower in a slight flight-to-safety bid. The Dow transports were down more than 2.2 percent, and airlines were sharply lower. Delta Air Lines suffered a major computer outage Sunday, but all carriers were under pressure, with United Continental down more than 5 percent. "There was the issue with Delta, but it's more about whether does air travel get more complicated," said Hogan.



The sell-off, however, is more likely a temporary pause in a highly valued and complacent market, analysts said. It also comes in a week when the Fed is scheduled to meet, and while the central bank is not expected to take action, traders are discussing the fact that inflation is picking up, economic data is strong and the Fed could stick to its plan to hike interest rates three times this year.

"The market was set up for a pause at some point … I can't see this is going to dominate the rest of the year, take over the world economy and world earnings trend and become the ending event. I just don't see where this is going to be that. So I think this calms down or is watered down either way, and people move on to the next Trump volatility moment," said James Paulsen, chief investment strategist at Wells Capital Management. Paulsen said the sell-off could create a buying opportunity. Stocks have been supported since the election by optimism that Trump's growth policies would be embraced by a Republican Congress and quickly adopted. Stocks held onto gains, and the Dow crossed 20,000 last week as markets focused on Trump's approval of two pipelines more than his threat to put taxes on Mexican imports and his spat with the president of Mexico over who would pay for a wall on the border. Equities "were set up for perfection, and I think Trump reminded everybody that what you see is what you get, for better or worse," said Peter Boockvar, chief market analyst at The Lindsey Group. "If this becomes embedded, this has economic implications. Will technology companies get the best people? Will overseas countries respond in kind? Will it affect business? It's all part of the same U.S.-centric protectionism. I get the security issues, but it is still part of the mentality: 'Everyone is stealing our business. Every one is out to kill us, and we're going to close our borders.'"

To some extent, the markets may have rallied too soon and got ahead of the politics. … We said pretty consistently we do expect fiscal expansion and probably the best chance of tax reform that we've had for some time. Tina Fordham chief global political analyst, Citi