Stocks wobble as White House unveils tax plan
Stock indexes wobbled between modest gains and losses on Wednesday as the White House unveiled broad outlines of its plan to slash tax rates.
Anticipation for a big tax cut, along with looser regulations on businesses, have been two of the main drivers behind the stock market's surge since November, when Republicans swept into Washington.
The White House delivered just that on Wednesday, when officials said they hope to cut the top corporate tax rate to 15% from 35%.
But many specifics are still to be negotiated, such as how much it will affect the government's budget deficit, and they will need to be hammered out with Congress. That left investors questioning exactly how much benefit will flow through to corporate profits, and how much stock prices should climb beyond what they already have.
The Standard & Poor's 500 index slipped by 1.16 points, or less than 0.1%, to 2,387.45. It had briefly climbed above its record closing level of 2,395.96 earlier in the day, only to give up its gains in the last minutes of trading.
The Dow Jones industrial average lost 21.03 points, or 0.1%, to 20,975.09, and the Nasdaq composite slipped 0.27 points, or less than 0.1%, to 6,025.23. Stocks of smaller companies did better, with the Russell 2000 index of small-caps rising 8.35, or 0.6%, to 1,419.43.
The proposal for a 15% corporate tax rate is likely just an opening salvo, and negotiations with Congress may push that figure higher, analysts said.
Any corporate tax cut would help boost profits for businesses, which would help justify the 11.6% surge for the S&P 500 since Election Day. Some investors are worried stocks have grown too expensive because prices have climbed faster than corporate profits.
Edwards Lifesciences jumped to the largest gain in the S&P 500 on Wednesday after it reported stronger revenue and profit for the latest quarter than analysts expected. The company also raised its profit forecast for the year. Its stock jumped 10.38 dollars, or 10.5%, to 109.30 dollars.
Wynn Resorts rose 6.97 dollars, or 5.9%, to 125.19 dollars after reporting revenue and profits that topped expectations. The company saw stronger revenue from its Las Vegas casino, as well as its new Macau resort, which opened in August.
On the losing end was US Steel, which reported a loss for the first quarter and cut its profit forecast for the year. Its stock sank 8.33 dollars, or 26.85%, to 22.78 dollars.
Seagate Technology, a maker of hard drives and other data storage products, fell 8.50 dollars, or 16.8%, to 42.01 dollars after reporting weaker revenue for the latest quarter than analysts expected. Its profit nevertheless topped expectations.
In European stock markets, the French CAC 40 rose 0.2%, the FTSE 100 in London added 0.2% and the German DAX was close to flat. In Asia, the Japanese Nikkei 225 jumped 1.1%, the South Korean Kospi rose 0.5% and Hong Kong's Hang Seng added 0.5%.
The euro slipped to 1.0899 dollars from 1.0939 dollars late Tuesday, while the dollar rose to 111.38 Japanese yen from 111.09 yen. The British pound rose to 1.2843 dollars from 1.2830 dollars.
US government bond prices rose. The yield on the 10-year Treasury note slipped to 2.30% from 2.34% late on Tuesday.