Wednesday 20th December 2017
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Wall Street fell from record highs as investors eyed whether the Republican tax bill, set to cut corporate tax rates, will clear enough votes in the House and the Senate to land on US President Donald Trump’s desk.
“The market really has been trading in lock-step with the progress that’s being made,” Art Hogan, chief market strategist at B Riley FBR, told Bloomberg. “Any pause we’re taking today is sort of taking a deep breath to see if we get across the goal line.”
In 1.44pm trading in New York, the Dow Jones Industrial Average slipped 0.05 percent, while the Nasdaq Composite Index declined 0.4 percent. In 1.28pm trading, the Standard & Poor’s 500 Index fell 0.2 percent.
US Treasuries also dropped, sending the yield on the 10-year note seven basis points higher to 2.46 percent.
Companies across all industries and sectors would pay an average effective tax rate of 9 percent next year under the Republican tax-overhaul bill, Bloomberg reported, citing a Penn Wharton Budget Model study released on Tuesday. By 2027, that average effective rate would double to 18 percent because of some corporate tax breaks that would move off the books, according to the study.
“Obviously there is high confidence that it will get passed, but there is a very narrow margin for error, within the Senate especially. So there’s a little bit of a pause to see what’s going to happen,” Chris Zaccarelli, chief investment officer of Independent Advisor Alliance in Charlotte, North Carolina, told Reuters.
At Monday’s close, 30 percent of the companies in the S&P 500 traded above their average analyst price target, Bloomberg reported, citing data compiled by Strategas Research Partners, meaning that those stocks have already climbed to levels where they’re expected to be 12 months from now.
The Dow moved lower as declines in shares of Apple and those of General Electric, down 0.9 percent and 0.8 percent respectively, outweighed gains in shares of Wal-Mart and those of Home Depot, both recently up 1 percent.
Apple shares fell as broker Instinet downgraded the stock to “neutral,” from “buy,” because of the outlook for iPhone X sales.
"We induce from muted iPhone X promotions that demand is likely to be in line with Apple's expectations for Q1," Jeffrey Kvaal, a technology analyst at the New York City-based brokerage, said in the note, according to media reports.
Meanwhile, a Commerce Department report showed US housing starts advanced more than expected in November, bolstered by single-family home building which climbed to the highest level in a decade.
In Europe, the Stoxx 600 Index finished the session with a 0.4 percent drop from the previous close. France’s CAC 40 Index fell 0.7 percent, while Germany’s DAX Index also closed 0.7 percent weaker.
The UK’s FTSE 100 Index eked out a 0.1 percent gain.
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