Stocks slip slightly on tech as full US tax plan vote looms

NEW YORK: Global stock markets edged lower on Tuesday, while US Treasury yields rose, as Republican legislation with steep cuts to corporate taxes cleared the House of Representatives and headed towards a final vote in the Senate.

US stocks hit successive highs ahead of the tax overhaul bill, but modest selling has crept into the market as most traders see the positive impact of the bill as already priced in.

“I really think it might be: buy the rumour, sell the news,” Jim Paulsen — the chief investment strategist with the Minneapolis-based Leuthold Group — said.

“Wall Street has had long enough to vet this thing.”

The Dow Jones Industrial Average fell 37.45 points (0.15 percent) to end at 24,754.75, the S&P 500 lost 8.69 points (0.32 percent) to 2,681.47, and the Nasdaq Composite dropped 30.91 points (0.44 percent) to 6,963.85.

The pan-European FTSEurofirst 300 index lost 0.51 percent and MSCI’s gauge of stocks across the globe shed 0.30 percent.

The US House of Representatives approved the tax bill by a vote of 227-203. A Senate decision could come Tuesday night on what would be the biggest US tax overhaul in more than 30 years.

However, the US Senate parliamentarian has ruled against three provision of the Republican tax bill, forcing the House of Representatives to hold a second vote on the legislation, Senator Bernie Sanders said.

US President Donald Trump is expected to sign the bill into law by the end of the week if it is passed by the Senate.

The plan includes slashing the corporate tax rate to 21 percent from 35 percent, which analysts say would likely increase profits, buybacks and dividend payouts.

A slump in technology stocks, led by Apple Inc, also helped drag markets down in afternoon trading.

Apple shares fell more than 1 percent after broker Instinet downgraded the stock to “neutral” from “buy” on doubts about iPhone X sales.

US Treasury yields rose with the benchmark yield hitting a seven-week high as the tax bill pushed forward.

Before the House vote, bonds were selling in reaction to data that showed US domestic home construction rose to a 13-month peak in November, with single-family home construction hitting a 10-year high.

Now, bond investors could be pulling back on expectations of economic growth, Jack Ablin — the chief investment officer with Chicago-based BMO Private Bank — said.

“Some may be concerned the boost on the fiscal side can be offset by monetary tightening,” Ablin said.

Benchmark 10-year US Treasury notes were last down 20/32 in price to yield 2.4644 percent, from 2.392 percent late Monday.

The 30-year bond was down 1-17/32 in price to yield 2.206 percent, from 2.744 percent.

The US dollar, which slipped on tax plan doubts on Monday, began to flatten on the unexpectedly strong housing data.

In late trading, the dollar rose 0.3 percent against the yen to 112.92 yen. It was little changed against the Swiss franc, but higher versus sterling as well as the Australian, Canadian, and New Zealand dollars.

The dollar index, which fell 0.26 percent, was weaker against the euro, which was up 0.5 percent to $1.1840.

Gold, which dipped as US Treasury yields rose, is on track to post its narrowest trading range of any quarter in a decade in the last three months of the year.

Spot gold added 0.1 percent to $1,262.07 an ounce.

US gold futures fell 0.02 percent to $1,265.20.

Oil rose slightly, aided by an ongoing North Sea pipeline outage, supply cuts and expectations that US crude inventories had fallen for the fifth week.

Brent crude was up 42 cents or 0.66 percent to $63.83 a barrel.

US crude rose 47 cents or 0.8 percent to $57.69.