Stocks slide on Se­nate tax plan

Los Angeles Times - - BUSINESS BEAT -

Stocks skid­ded Thurs­day af­ter Se­nate Repub­li­cans sur­prised Wall Street by propos­ing a de­lay in cut­ting cor­po­rate taxes. In­dus­trial and tech­nol­ogy com­pa­nies fell the most, but stocks re­gained some of their losses be­fore the clos­ing bell.

Repub­li­can sen­a­tors in­tro­duced their tax bill a week af­ter their House coun­ter­parts did the same. While both bills would ul­ti­mately re­duce the cor­po­rate tax rate to 20% from 35%, the Se­nate leg­is­la­tion doesn’t do that un­til 2019.

In­dus­trial com­pa­nies had their worst day on Wall Street in al­most three months. Weak re­ports from air­craft parts maker Tran­sDigm and med­i­cal waste pro­ces­sor Ster­i­cy­cle were partly to blame, while a weak fore­cast from John­son Con­trols also hurt the sec­tor.

Me­dia com­pa­nies traded higher af­ter a solid re­port from 21st Cen­tury Fox.

At mid­day, stocks were on track for their big­gest loss in months, with the Dow Jones in­dus­trial av­er­age off as much as 253 points, but they made up some of that ground in the af­ter­noon.

The sec­tors that fell Thurs­day in­clude some of the best-per­form­ing stocks this year, as in­vestors re­acted to the po­ten­tially de­layed tax cut by tak­ing some prof­its.

“Most in­vestors knew there was un­cer­tainty about the spe­cific pro­vi­sions, but thought that the House and the Se­nate would at least agree there would be some kind of cut in cor­po­rate tax rates in 2018,” said Kate Warne, an in­vest­ment strate­gist at Ed­ward Jones.

Google’s par­ent com­pany Al­pha­bet tum­bled $10.57, or 1%, to $1,047.72, while on­line auc­tion com­pany EBay lost $1.32, or 3.6%, to $35.69.

Also wor­ry­ing in­vestors: re­ports over the last two days that the Jus­tice Depart­ment has ob­jec­tions to AT&T’s pur­chase of Time Warner Ca­ble. Af­ter a steep loss Wed­nes­day, Time Warner Ca­ble fell a fur­ther $1.45, or 1.6%, to $87.05, and AT&T rose 56 cents, or 1.7%, to $34.

Also gain­ing were 21st Cen­tury Fox, adding 61 cents, or 2.2%, to $28.70, and ca­ble provider Com­cast, up 35 cents, or 1%, to $36.56.

Bench­mark U.S. crude gained 36 cents to $57.17 a bar­rel. This week, oil has been trad­ing at its high­est prices since the mid­dle of 2015. Brent crude, used to price in­ter­na­tional oils, added 44 cents to $63.93 a bar­rel in Lon­don.

Gold rose $3.80 to $1,287.50 an ounce. Sil­ver lost 16 cents to $16.98 an ounce.

Bond prices were lit­tle changed. The yield on the two-year Trea­sury note fell to 1.64% from 1.65%. The yield on the 10-year note re­mained at 2.33%.

The dol­lar fell to 113.32 yen from 113.78 yen. The euro rose to $1.1643 from $1.1596.

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