President Donald Trump's firing of FBI Director James Comey raises concerns that it could create a sideshow that may delay the Trump agenda, analysts said Tuesday evening.
"I think it's still another story that's going to slow down Trump's agenda," said Greg Valliere, Horizon Investments chief global strategist. "We're going to have a budget fight in the next few months. Nobody has any idea what the Senate is going to do on health care. You have another huge story that's going to gobble up more time. It's a distraction for sure."
BMO Private Bank CIO Jack Ablin said he does not expect markets to react to the news, which was released after the close of U.S. trading. But it could add to doubt that already exists about when Congress and the White House will actually tackle the policy most important to markets — tax reform.
Stocks have moved higher to record levels since Trump won the election, but the market is no longer favoring the stocks that would show a clear benefit from Trump's policies on infrastructure spending or even tax reform.
"There's a healthy degree of skepticism among investors already that a lot of these policies that Trump has been bombastically touting around aren't going to get signed into law. This would seem to undermine that confidence," said Ablin.
Valliere said he still expects to see tax reform, but market pros have been questioning when. House Speaker Paul Ryan is scheduled to speak on tax reform Wednesday in Ohio.
"There's only two things I see that could really derail this market. One could be a geopolitical crisis, and I don't see it, and the second would be a sign that tax reform bill is dead, and I don't see it. It's a distraction," Valliere said.
Valliere said he does not expect Comey's termination to lead to the FBI ending its investigation into possible ties between the Trump campaign and Russia.
"They're going to continue the investigation. There's no question in my mind," he said, adding, however, it will be a point of contention. Democrats were already calling for a special prosecutor Tuesday evening.
"It's going to embolden Trump's critics, who say he has something to hide…but I think this has become too much about Comey for the last few months. I think an FBI director should be more circumspect and he wasn't," said Valliere.
Trump fired Comey on the advice of Deputy Attorney General Rod Rosenstein and Attorney General Jeff Sessions, who has recused himself from dealing with the Russian investigation.
"I think there's going to be a huge focus on him [Sessions] and his role. This complicates things. I think the average Americas are sick of this whole thing but inside the beltway, it slows down progress on the Trump agenda," said Valliere.
In a memorandum titled "Restoring public confidence in the FBI," Rosenstein said he couldn't defend Comey's handling of the investigation into Hillary Clinton's emails.
"The Director was wrong to usurp the Attorney General's authority on July 5, 2016, and announce his conclusion that the case should be closed without prosecution. It is not the function of the Director to make such an announcement," the deputy attorney general said
Comey testified before Congress last week, and the FBI later clarified that he had overstated the number of emails that Hillary Clinton aide Huma Abedin forwarded to her husband Anthony Weiner.
Watch: Dem. Sen. Chuck Schumer responds to Comey firing