Friday | November 17, 2017
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Industrial and tech stocks fall on potential tax cut delay

NEW YORK — 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 multinational 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.

 

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