Stocks slide on Senate tax plan
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.