Boocvkar pointed out that the market has basically moved sideways since mid-December, even with the Dow's run over 20,000 last week. The S&P at 2,272 is the same place where it was on Dec. 13. The sectors that benefited in the Trump rally were hard hit in Monday trading. Energy was down 1.9 percent, while materials were down 1.3 percent and financials were down 1.2 percent.
Analysts point out that Trump is literally following up his list of campaign promises with actions, while investors had focused more on the positive policies that could generate economic growth.
"It would appear that they're not the administration's priority. Now, we haven't changed our view that any of these polices aren't likely," said Tina Fordham, Citi chief global political analyst on CNBC. "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."
Fordham said she expects those policies to take a while since they have to be approved by Congress, and they are still likely to be considered in the second half of the year. "I think this focus on security and social issues may start to give investors pause or thought," she said.
The ban, issued through executive order, drew criticism from tech company CEOs, who were already concerned that obtaining visas for foreign-born workers is too difficult. It also drew fire from congressional Democrats and Republican Sens. John McCain and Lindsey Graham, who have challenged Trump on other issues. The concern is that the ranks of the disenchanted will grow, and Trump's pro-growth agenda will get mired down in Congress.
Trump has said the ban is necessary for security and to prevent terrorists from entering the country. The order blocks refugees from entering the U.S. for 120 days. It bars citizens from Iraq, Syria, Iran, Sudan, Libya, Somalia and Yemen from entering the U.S. for 90 days.
"The more time and energy and political capital spent on immigration and trade, while not getting anywhere on tax reform, the more the market worries," said John Briggs, head of strategy at NatWest Capital Markets. Briggs said that the administration may be waiting for Trump's Treasury secretary pick, Steven Mnuchin, to be approved before turning to taxes. He said the bond market is following the stock market. "It's a pretty minor move. This is a pretty big week for data, the Fed and all that. There's a lot of uncertainty out there. I think risk is light, because they want to see what comes out of the wash with politics and the data."
Briggs said it's disappointing there's been no action on tax reform.
"We're 10 days in, and we've seen nothing except the border tax, which is going to be higher prices for consumers. If we don't have anything by the end of the week, I'll be personally disappointed," Briggs said. "I feel like if you get another seven days under your belt and you still don't have anything out of it but immigration, trade and taxing Mexico, you just have to wonder what the priorities are."