Wall Street down on signs of delay in corporate tax cuts
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., November 8, 2017. REUTERS/Brendan McDermid
REUTERS: Wall Street edged lower at the open on Friday hurt by signs of delay in corporate tax cuts until 2019, which may stall the market rally.Senate Republicans have unveiled a tax-cut plan that would delay lowering corporate rate to 20 percent by a year and provide small-business owners with a deduction rather than a special business rate.The Senate Republicans' version of the bill differs markedly on corporate, business and individual tax cuts from legislation detailed by their counterparts in the House of Representatives.The S&P 500 index has surged more than 20 percent since the 2016 presidential election, fueled by Donald Trump's promises.All three major indexes were on track to end lower for the week, with the S&P and the Dow on track to post weekly losses after eight straight weeks of gains.The S&P 500 is trading at 18 times expected earnings, expensive compared with its 10-year average of 14.3, according to Thomson Reuters Datastream. Cutting corporate taxes would boost earnings and make stocks relatively less expensive.
"If the Senate version is elected, a market correction will follow and as the battle for tax reform intensify, stocks are likely to feel the pinch of a wobbly market," said Peter Cardillo, chief market economist at First Standard Financial.At 9:36 a.m. ET (1336 GMT), the Dow Jones Industrial Average was down 41.11 points, or 0.18 percent, at 23,420.83, the S&P 500 was down 5.5 points, or 0.21 percent, at 2,579.12.The Nasdaq Composite was down 15.18 points, or 0.22 percent, at 6,734.88.Seven of the 11 major S&P sectors were lower, with the energy index's 0.67 percent fall leading the decliners.
With third-quarter earnings winding down and stocks still trading at record levels, investors are also looking to book profits.Earnings for the quarter are expected to have climbed 8 percent, compared with expectations of a 5.9 percent rise at the start of October, according to Thomson Reuters I/B/E/S.Shares of Nvidia were up 4.4 percent after the chipmaker's revenue forecast for the current quarter topped estimates.Walt Disney rose 2.3 percent as the promise of a new film trilogy overshadowed weak quarterly results and struggles at the media company.Hertz Global Holdings jumped 11.2 percent as the car rental company reported a better-than-expected net profit.Nordstrom fell 1.2 percent after its quarterly same-store sales came in below expectations, while J.C. Penney was up 14.6 percent after the department store chain reported third-quarter same-store sales that were twice what it had estimated.Declining issues outnumbered advancers on the NYSE by 1,397 to 1,095. On the Nasdaq, 1,142 issues rose and 1,129 fell.(Reporting by Tanya Agrawal; Editing by Arun Koyyur)
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