Doubts about Trump tax cuts weigh on Wall Street

Wall Street ended marginally lower on Friday, with losses in Intel and Apple as investors worried about the future of promised corporate tax cuts following dueling plans unveiled by Republican lawmakers.

The S&P 500 and the Dow Jones Industrial Average ended the week lower for the first time in nine weeks.

US Senate Republicans released a tax plan on Thursday that differed from a version put forth by the House of Representatives on several key fronts, including putting off corporate tax cuts for a year.

Expectations of lower taxes, one of President Donald Trump’s key campaign promises, have helped drive the S&P 500 up 20% since the 2016 presidential election.

Failure to cut corporate taxes would increase concerns about Trump’s ability to pass legislation and could shake markets that have been banking on lower tax rates to boost company earnings.

The S&P 500 on Friday stood at 18.1 times expected earnings, the highest since 2004, according to Thomson Reuters Datastream.

Arrow Funds director of research John Serrapere put the chances of successfully passing meaningful tax cuts at 50%, and he warned that failing could trigger a correction of as much as 15% in stocks.

“There’s not a lot of confidence. I‘m not pessimistic, but there are a lot of pieces that need to be put together,” Serrapere said.

The Dow fell 0.17% to end at 23,422.21, while the S&P 500 slipped 0.09% to 2,582.3.

The Nasdaq Composite edged up 0.01% to 6,750.94.

For the week, the Dow lost 0.5% and the S&P 500 slipped 0.21%. The Nasdaq gave up 0.2% for the week, snapping six weeks of weekly gains.

Intel fell 1.55% and Apple lost 0.33%, both accounting more than any other companies for the S&P 500’s decline.

Seven of the 11 major S&P sectors fell, with the energy index’s 0.81% dip leading the decliners as oil prices fell.

Nvidia jumped 5.27% and hit a record high after the chipmaker’s revenue forecast for the current quarter topped estimates.

A rise in media stocks also helped limit the slide.

Disney rose 2.05% as the promise of a new Star Wars trilogy overshadowed its weak quarterly results.

Time Warner Inc. jumped 4.08% while News Corp. climbed 5.15%.

The Bank of Israel on Friday set its representative rate for the US dollar at NIS 3.5290, for the British pound at NIS 4.6375, for the Canadian dollar at NIS 2.7860, for the Australian dollar at NIS 2.7085, and for the South African rand at NIS 0.2468.

The central bank set the representative rate for the euro at NIS 4.1069, and for 100 yen at NIS 3.1086.