|

Wall Street erases portion of early losses, still closes lower as investors digest tax plan

  • Senate Republicans unveil a tax plan that differs greatly from the House.
  • Tech and homebuilders suffer heavy losses on proposed changes to the bill.
  • Late recovery help stocks pare a portion of daily losses.

Following a lower start to the day, major equity indexes extended their losses on Thursday as the Senate offered to delay the corporate tax rate reduction to 20% by a year and to provide a cut to small-business owners instead of giving the originally planned special business rate.

“It’s been a year since the election. We’ve gone up 22 percent on hopes of what the Trump agenda would bring, and while they’re trying to work toward this thing, they haven’t really accomplished much yet. If progress is not made, the equity market should either pause or correct until meaningful progress is made,” said Michael O‘Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, told Reuters.

Uncertainty surrounding the changes to mortgage rate deductions and real estate taxes, the Nasdaq Housing Index (PHLX) lost nearly 1%. Moreover, the S&P 500 Information Technology Sector (SPLRCT), which had the strongest rally among major indexes on hopes of the tax reform since October, lost more than 9 points to close the day 0.85% lower.

During the second half of the session, Republican Senator John Cornyn said that Senate Republicans were working to find a solution to avoid the one-year delay in corporate tax rate cut, allowing the indexes to retrace some of their daily losses. The Dow Jones Industrial Average lost 101.63 points, or 0.43%, to 23,461.73, the S&P 500 dropped 9.86 points, or 0.38%, to 2,584.52 and the Nasdaq Composite lost 39.86 points, or 0.6%, to 6,749.26.

Headlines from the NA session

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.