Watch CBSN Live

Investors hoping for quick passage of tax relief

Remembering Black Monday

Stocks surged early Monday, buoyed by progress on a bill to overhaul the nation's tax code, but faded later in the trading session.

The Standard & Poor's 500 index fell 3 points, or 0.1 percent, to close at 2,639. The Dow Jones industrial average gained 58 points, or 0.2 percent, to 24,290. The Nasdaq composite lost 72 points, or 1 percent, to finish at 6,775. 

"The Nasdaq was particularly weak today, with some investors questioning the impact a lower corporate tax rate would have on tech companies that already pay low effective tax rates," analysts with KDP Investment Advisors said in a note.

Financial markets rose sharply earlier in the day after the Senate passed sweeping tax legislation early Saturday.

Banks, which are expected to benefit from the tax cuts, rose more than the rest of the market in early trading Monday, with Bank of America (BAC) shares jumping 3.4 percent. Consumer-focused and industrial companies were also putting up big gains. Cable TV and entertainment company Comcast (CMCSA) rose 3.4 percent and Boeing (BA) rose 2.2 percent.

Aetna (AET) rose 1.8 percent after the health insurer agreed to be acquired by drug store operator CVS (CVS). CVS fell 3.9 percent.

The House, which passed its own tax bill in November, and Senate must now produce a combined measure before sending it to President Donald Trump to signed into law. Wall Street analysts think that could happen by year-end.

"We think the chances the tax bill will be finished by the end of 2017 have risen to around 65 percent (up from 50 percent before the Senate vote), and our estimate of the chances of the bill passing regardless of the timing are now in the 80-85 percent range," analysts with Keefe, Bruyette & Woods said in a research note. 

How will the GOP tax bill impact your family?

"Tax reform legislation has now passed both chambers of Congress and looks very likely to become law by year-end, probably within the next two weeks," Goldman Sachs economists said in a report on Monday. 

They emphasized, however, that "the compromise legislation we expect to emerge from the conference committee would reduce the effective corporate tax rate by only a couple of percentage points" relative to its current levels.

Along with financial firms, smaller companies look to be some of the biggest winners from the tax overhaul because they generally pay higher rates than their bigger rivals. 

Other likely winners include telecoms, which pay some of the highest effective tax rates among the big companies in the S&P 500. Telecommunication stocks jumped 2.2 percent for the biggest gain of the 11 sectors in the index.

Technology companies, meanwhile, will likely get less of a boost. They already were typically paying the lowest effective tax rates of the 11 sectors in the S&P 500, analysts said.

Tech stocks in the index were down 1.3 percent, well behind the rest of the market. It's a very different position for the sector, which has led the market for most of this year and has nearly doubled the performance of the S&P 500.

View CBS News In