- Markets Insider
- Stocks fell on Thursday and were headed for their biggest decline since August. The sell-off happened amid doubts about whether Republicans would be able to pull off their promised tax-cut plan. A Senate bill, with a few differences compared to the House version, was expected to be unveiled on Thursday.
The S&P 500 was on track to post its biggest one-day percentage loss since August as doubts on whether Republican would be a able to pulloff their promised tax-cut plan weighed on the markets.
A U.S. Senate tax-cut bill, different from one already in the House of Representatives, was expected to be unveiled on Thursday, complicating the tax overhaul push by the Trump administration.
The bill includes a one-time repatriation tax designed to encourage US-based companies that do business overseas to bring those profits back stateside. This could encourage stock buybacks, deal financing, debt repayments, and other activities that are attractive to shareholders.
The S&P 500 has risen about 21 percent since the election of President Donald Trump a year ago, partly on the back of his promises to cut taxes and other business-friendly measures.
However, Republicans are yet to score a major legislative win since Trump took office in January, even though the party controls both chambers of Congress as well as the White House.
“There is continuing confusion over the possibility of tax cuts being meaningful and passing this year,” said James Abate, chief investment officer at Centre Asset Management.
“At the end of the day some version will get passed but it will be watered down. There is too much resistance from special interest groups and budget hawks and there is a fear that the tax cuts will be in name only.”
With earnings winding down and stocks still trading near record levels, investors are also looking to book profits, Abate said.
At 12:31 p.m. ET, the Dow Jones Industrial Average was down 229 points, or 0.97%, at 23,334, the S&P 500 was down 27 points, or 1.04% percent, at 2,567.41.
The Nasdaq Composite was down 96 points, or 1.41% percent, at 6,694.
Ten of the 11 major S&P sectors were lower, with the technology index’s 1.85% loss leading the decliners.
Technology has been the best performing S&P sector so far this year with a 37% rise, despite concerns of stretched valuations.
(Reuters reporting by Tanya Agrawal; Editing by Arun Koyyur)