Senate surprise on tax policy prompts dip on Wall Street

Senate surprise on tax policy prompts dip on Wall Street
File photo

US stocks slipped today 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.

Senate Republicans introduced a 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 does not do that until 2019.

However the worst results Thursday came not from the smaller, US-focused companies that might benefit the most from a domestic tax cut, but from larger multi-national companies like industrial and technology firms and basic materials makers.

Industrial companies had their worst day 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 Twenty-First Century Fox and energy companies also rose.

At midday stocks were on track for their biggest loss in months, as the Dow Jones industrial average fell as much as 253 points, but they made up some of that ground in the afternoon.

The stock sectors that fell on Thursday include some of the best-performing stocks on the market this year, and 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.

The Standard & Poor's 500 index dropped 9.76 points, or 0.4%, to 2,584.62.

The Dow Jones industrial average fell 101.42 points, or 0.4%, to 23,461.94.

The Nasdaq composite slid 39.07 points, or 0.6%, to 6,750.05.

Each closed at an all-time high on Wednesday.

The Russell 2000 index of smaller-company stocks fell 6.71 points, or 0.5%, to 1,475.02, its lowest level since late September.

Google's parent company Alphabet tumbled 157 dollars, or 1%, to 1,047.22 dollars while payment company eBay lost 1.32 dollars, or 3.6%, to 35.69 dollars.

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