(AP) — U.S. stocks skidded Thursday after Senate Republicans surprised Wall Street by proposing a delay in cutting corporate taxes. Industrial and technology companies fell the most, but stocks regained some of their losses before the closing bell.
Senate Republicans introduced a tax bill a week after their House counterparts did the same. While both bills would ultimately reduce the corporate tax rate to 20 percent from 35 percent, the Senate legislation doesn’t do that until 2019. However the worst results Thursday came not from the smaller, U.S.-focused companies that might benefit the most from a domestic tax cut, but from larger multi-national companies like industrial and technology firms and basic materials makers.
Industrial companies had their worst day in almost three months. Weak reports from aircraft parts maker TransDigm and medical waste processor Stericycle were partly to blame, while a weak forecast from Johnson Controls also hurt the sector. Media companies traded higher after a solid report from Twenty-First Century Fox and energy companies also rose. At midday stocks were on track for their biggest loss in months, as the Dow Jones industrial average fell as much as 253 points, but they made up some of that ground in the afternoon.
The stock sectors that fell Thursday include some of the best-performing stocks on the market this year, and investors reacted to the potentially delayed tax cut by taking some profits.
“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.
The Standard & Poor’s 500 index dropped 9.76 points, or 0.4 percent, to 2,584.62. The Dow Jones industrial average fell 101.42 points, or 0.4 percent, to 23,461.94. The Nasdaq composite slid 39.07 points, or 0.6 percent, to 6,750.05. Each closed at an all-time high on Wednesday. The Russell 2000 index of smaller-company stocks fell 6.71 points, or 0.5 percent, to 1,475.02, its lowest level since late September.
Google’s parent company Alphabet tumbled $157, or 1 percent, to $1,047.22 while payment company eBay lost $1.32, or 3.6 percent, to $35.69.
Warne added that something else worried investors Thursday: reports over the last two days that the Justice Department has objections to AT&T’s purchase of Time Warner Cable. Donald Trump’s administration has emphasized cutting regulations, and she said investors are surprised the government is taking issue with the $85 billion deal — and that the Justice Department and the companies are arguing about it in public.
After a steep loss Wednesday, Time Warner Cable fell a further $1.45, or 1.6 percent, to $87.05 and AT&T rose 56 cents, or 1.7 percent, to $34.
Twenty-First Century 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. Its stock added 61 cents, or 2.2 percent, to $28.70 and cable provider Comcast gained 35 cents, or 1 percent, to $36.56. Walt Disney, which was reported this week to have spoken to Fox about buying most of its entertainment assets, added $1.50, or 1.5 percent, to $102.68.
Macy’s surged $1.93, or 11 percent, to $19.50 after its third-quarter profit was greater than expected. Competitor Kohl’s reversed most of an early loss and picked up 38 cents to $41.17 cents to $40.65. Dillard’s jumped $6.20, or 12.2 percent, to $57.22 following its report. Macy’s and Kohl’s have both fallen sharply this year as they deal with falling sales and growing competition from online retailers.
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.
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.
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.
The dollar fell to 113.32 yen from 113.78 yen. The euro rose to $1.1643 from $1.1596.
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.