Stocks decline amid tax debate

Treasuries fell for a third day and U.S. stocks limped to the end of a week that saw a bout of volatility return to global financial markets.

The S&P 500 Index slumped, posting its first down week since early September. The move was led in part by health-care shares, which dropped as the industry grapples with how to handle Amazon as a potential competitor. Energy stocks also struggled as crude slipped below $57 a barrel amid rising tensions in the Persian Gulf.

“Market participants expect OPEC to extend the production cuts beyond March 2018 and stocks to decline further,” commodities analysts at Commerzbank wrote in a note to clients Friday. “That said, the reduction of stocks should be sluggish even if the agreement to cut production is extended. What’s more, the higher price level should lead to a further rise in U.S. shale oil production. Oil is already much too expensive even if the latest developments in Saudi Arabia justify a certain risk premium on the oil price.”

The yield on 10-year Treasuries punched through 2.4 percent, joining a spike in European sovereign rates with inflation worries ratcheting up. The dollar was little changed as President Donald Trump’s Asia trip wound down. High-yield debt steadied, the largest junk bond exchange-traded fund rose after three days of declines.

“We think Americans are confused by the current tax cut proposals, which will radically change how workers will pay Uncle Sam,” Chris Rupkey, chief financial economist with Bank of Tokyo-Mitsubishi UFJ Ltd., wrote in an email. “Washington uncertainty is back. Big time. Bet on it.”

In addition, traders have begun preparing for a series of potential interest rate increases by the Federal Reserve over the next 12 months.