U.S. stocks saw sizable losses Thursday, with technology and industrial companies and banks slumping after Republicans in Congress said they might delay their proposed corporate tax cut to 2019. Investors soon began selling some of the stocks that have done the best this year.
"Markets are having a hard time digesting why cutting taxes is such an impossible task for Republicans," said Jamie Cox, managing partner for Harris Financial Group. "Markets are telling Republicans to get them done and stop wasting time."
The Standard & Poor's 500 index fell 9 points, or 0.4 percent, to 2,584. The Dow Jones industrial average declined 101 points, or 0.4 percent, to 23,461. The Nasdaq composite index fell 39 points, or 0.6 percent, to 6,750. Each closed at an all-time high on Wednesday. The Russell 2000 index of smaller-company stocks fell 10 points, or 0.7 percent, to 1,471, its lowest level since late September.
While investors sold some of the stocks that have done the best this year, including technology and basic materials companies, they didn't shift much money into safer investments like bonds or gold.
Taxing Wall Street's patience
Senate Republicans rolled out their own tax bill that would delay the corporate tax rate cut until 2019, instead of 2018 under the House bill. Both bills would lower that corporate rate to 20 percent from 35 percent. Postponing the tax cut would reduce the costs of the bill, which is projected to add more than $1 trillion to the U.S. debt.
"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.
While it's been a few months since stocks fell this much, it's not a big drop by historic standards. Warne said investors hope taxes will be cut, but they haven't invested much money in stocks on that basis.
Bump in the road
The stocks that fell the most Thursday wouldn't benefit that much from a cut in U.S. taxes. The proposed tax cut might help more U.S.-focused companies like regional banks and smaller firms, but those companies didn't fare worse than the rest of the market. Instead, the worst losses went to multinational firms. Warne said Thursday's news is making investors a bit more cautious, but the possibly delayed tax cut isn't why they're selling technology and industrial companies.
Google's parent company Alphabet tumbled $14.54, or 1.4 percent, to $1,043.7, while payment company eBay lost $1.24, or 3.4 percent, to $35.77. Microsoft slipped 70 cents to $83.86. In the industrial sector, machinery maker Caterpillar gave up $2.29, or 1.7 percent, to $135 and jet engine and elevator maker United Technologies skidded $2.03, or 1.7 percent, to $118.26.
Tuning into media companies
Media companies bucked the trend, many of them rising after Twenty-First Century Fox posted strong results in its latest quarter. Twenty-First Century Fox jumped $1.14, or 4.1 percent, to $29.23. Fox posted a bigger profit and more revenue than investors expected. Analysts said its cable networks did well, and it didn't lose subscribers the way some of its competitors have done recently. Elsewhere cable provider Comcast gained 59 cents, or 1.6 percent, to $36.80. Walt Disney, which was reported this week to be interested in buying most of Fox's entertainment assets, added $1.90, or 1.9 percent, to $103.08.
Rock and Roku
Streaming video device maker Roku soared after the company disclosed its quarterly results for the first time since it went public in late September. Roku reported more revenue than analysts expected and its forecasts also pleased Wall Street. The stock climbed $8.36, or 44.4 percent, to $27.20. Its initial public offering priced at $14 a share.
Macy's surged $1.95, or 11.1 percent, to $19.52 after its third-quarter profit was greater than expected. Competitor Kohl's reversed most of an early loss and slipped 14 cents to $40.65. Other retailers like Dillard's rose as well. Macy's and Kohl's have both fallen sharply and often disappointed Wall Street as they deal with falling sales and growing competition from online retailers. Macy's has lost almost half its value this year and Kohl's is down 16 percent.
Benchmark U.S. crude gained 36 cents to $57.17 a barrel in the New York. This week oil has been trading at its highest prices since the middle of 2015. Brent crude, used to price international oils, added 44 cents to $63.93 a barrel in London.
Wholesale gasoline held steady at $1.82 a gallon. Heating oil rose 3 cents to $1.95 a gallon. Natural gas climbed 3 cents to $3.20 per 1,000 cubic feet.
Bonds, metals and more
Bond prices were little changed. The yield on the 2-year Treasury note fell to 1.64 percent from 1.65 percent. The yield on the 10-year note remained at 2.33 percent.
In metal markets, gold rose $3.80 to $1,287.50 an ounce. Silver lost 16 cents to $16.98 an ounce. Copper dipped 1 cent to $3.09 a pound.
In currency markets, the dollar fell to 113.22 yen from 113.78 yen. The euro rose to $1.1647 from $1.1596.
Overseas, European stocks also sank. Germany's DAX gave up 1.5 percent and the CAC 40 in France dropped 1.2 percent. Britain's FTSE 100 shed 0.6 percent. Japan's Nikkei 225 index surged as much as 2 percent early on but finished with a loss of 0.2 percent. The Kospi in South Korea lost 0.1 percent and Hong Kong's Hang Seng added 0.8 percent.