Wall Street erases portion of early losses, still closes lower as investors digest tax plan
- Senate Republicans unveil a tax plan that differs greatly from the House.
- Tech and homebuilders suffer heavy losses on proposed changes to the bill.
- Late recovery help stocks pare a portion of daily losses.
Following a lower start to the day, major equity indexes extended their losses on Thursday as the Senate offered to delay the corporate tax rate reduction to 20% by a year and to provide a cut to small-business owners instead of giving the originally planned special business rate.
“It’s been a year since the election. We’ve gone up 22 percent on hopes of what the Trump agenda would bring, and while they’re trying to work toward this thing, they haven’t really accomplished much yet. If progress is not made, the equity market should either pause or correct until meaningful progress is made,” said Michael O‘Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, told Reuters.
Uncertainty surrounding the changes to mortgage rate deductions and real estate taxes, the Nasdaq Housing Index (PHLX) lost nearly 1%. Moreover, the S&P 500 Information Technology Sector (SPLRCT), which had the strongest rally among major indexes on hopes of the tax reform since October, lost more than 9 points to close the day 0.85% lower.
During the second half of the session, Republican Senator John Cornyn said that Senate Republicans were working to find a solution to avoid the one-year delay in corporate tax rate cut, allowing the indexes to retrace some of their daily losses. The Dow Jones Industrial Average lost 101.63 points, or 0.43%, to 23,461.73, the S&P 500 dropped 9.86 points, or 0.38%, to 2,584.52 and the Nasdaq Composite lost 39.86 points, or 0.6%, to 6,749.26.
Headlines from the NA session
- Market wrap: concerns that corporate tax cuts would be significantly delayed - Westpac
- Senate tax plan meets $1.5 trillion federal deficit ceiling for tax legislation - Reuters
- US Dollar looks to close day at weekly lows as tax proposal's details unveil
- House seeks to increase proposed tax rates on repatriated foreign profits to 14% from 12%
- US Senate Aide: Tax bill would repeal federal deductions for state and local income
- US: Sales of merchant wholesalers were $480.5 billion, up 1.3% from August