Stocks, dollar fall on tax plan worry

U.S. stocks stumbled Thursday, with losses widening after the Senate revealed that its tax plan would delay cuts to the corporate rate until 2019. Treasuries turned higher and the dollar extended losses.

All major U.S. equity gauges fell, with selling heaviest in technology shares that had been on a 10-day surge. Semiconductor stocks tumbled after Intel Corp. hired away a key executive at Advanced Micro Devices Inc. to run its new graphics chip business.

“The market wants to see tax cuts this year,” said Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas. “That’s the reason were seeing the selloff now.”

The bond market took its main cue from technical factors, as sovereign debt halted a rally that started two-weeks ago. Corporate credit faltered amid a glut of year-end issuance, with the starkest declines coming among the lowest-rated companies. Volatility spiked as investors appear to be growing increasingly pessimistic about the prospects for meaningful fiscal reform with both houses of Congress struggling to put forward tax proposals that have reasonable chances of becoming law.

“Policy makers hope to pass a tax plan by Thanksgiving,” said Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank. “But the looming political trade-offs and divergence in House and Senate proposals argue this deadline is nothing short of a holiday miracle.”

It’s been a year since Trump’s election win and investors are taking stock of his promises to get tough on trade, cut taxes and slash regulations.