Tech, small-cap stocks pull back from their recent highs

Associated Press

NEW YORK — U.S. stocks declined Tuesday as big technology companies and smaller firms gave up some of their recent gains. Stocks hit record highs over the previous two days as the Republican-backed tax bill made its way throughCongress.

Smaller companies in particular have surged because investors feel they will be major beneficiaries of lower corporate tax rates. High-dividend stocks dropped as bondyields rose.

Investors like the proposed tax cut because it would boost corporate profits and likely raise stock prices along with it. The bill would initially cut taxes for most Americans, but by 2027 would increase tax bills for most.

While stocks weren’t doing much Tuesday, bond prices fell. The yield on the 10-year Treasury note rose to its highest price in more than a month, to 2.45 percent from2.39 percent late Monday.

Invesco Global Market Strategist Kristina Hooper said two factors are sending bond yields higher: investors are selling bonds to buy stocks as the tax bill appears likely to pass, and they also feel the bill may contribute to inflation.

“There’s this expectation that we’ll see companies save money on taxes, to put it simply, and spend more in other areas,” she said. Investors think “it’s going to have an impact on employment, wages,and therefore inflation.”

The Standard & Poor’s 500 index lost 8.69 points, or 0.3 percent, to 2,681.47. The Dow Jones industrial average shed 37.45 points, or 0.2 percent, to 24,754.75. The Nasdaq composite gave up 30.91 points, or 0.4 percent, to 6,963.85. The Russell 2000 index of smallercompany stocks fell 12.17 points, or 0.8 percent, to 1,536.75. It climbed almost 3 percent over the previoustwo days.

Apple fell $1.88, or 1.1 percent, to $174.54 after it closed at a new high Monday. Visa lost $1.41, or 1.2 percent, to $112.14.

Investors also traded on corporate news. Offshore drilling platform maker McDermott International will acquire engineering, procurement and construction services company Chicago Bridge &Iron. The firmsvalued the deal at $6 billion. McDermott fell 90 cents, or 11.9 percent, to $6.69 and CB&I lost$1.91, or 10.7 percent, to $16.01.