Fed, tax deal raise indexes

S&P falls slightly because of bank stocks, while Caterpillar leads all gainers.

The major U.S. stock indexes finished mostly higher Wednesday, with small companies notching big gains as lawmakers in the House and Senate reached a deal on a sweeping tax reform package.

The Dow Jones industrial average eked out its third record-high close in as many days, driven by a jump in Caterpillar. But a last-minute pullback in bank stocks left the Standard & Poor’s 500 index slightly lower.

Packaged food and beverage stocks, health care companies and industrials shares accounted for much of the market’s modest gains. Banks struggled as longterm bond yields edged lower, which makes it tougher for banks to earn money from lending.

The decline in financial stocks came even as the Federal Reserve raised its benchmark rate for the third time this year.

“Widely expected. No big surprises. No big changes,” said Tim Dreiling, regional investment director at U.S. Bank Wealth Management. “It’s encouraging that they continue to see economic growth continuing into 2018, which aligns with our thinking.”

The S&P 500 index slipped 1.26 points, or 0.1 percent, to 2,662.85. The index closed at all-time highs on Monday and Tuesday.

The Dow gained 80.63 points, or 0.3 percent, to 24,585.43. The Nasdaq added 13.48 points, or 0.2 percent, to 6,875.80. The Russell 2000 index of smaller-company stocks picked up 8.33 points, or 0.6 percent, to 1,524.45.

Developments out of Washington put investors in the mood to buy small company shares.

Republican leadership in the House and Senate forged an agreement Wednesday on the GOP’s planned overhaul of the nation’s tax laws. Smaller companies stand to benefit most from a reduction in corporate tax rates because they tend to pay higher taxes than bigger corporations.

Caterpillar led the gainers among industrials stocks, adding $5.15, or 3.6 percent, to $148.57. It was also the biggest gainer in the Dow.

Oil prices veered lower. Benchmark U.S. crude fell 54 cents to settle at $56.60 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slid 90 cents, or 1.4 percent, to close at $62.44 per barrel in London.