New York
Wall Street’s main indexes were slightly lower on Tuesday, weighed down by an Apple-led pullback in technology stocks and after two strong session of gains on rising hopes that the US Congress will vote in favour of a proposed tax overhaul.
The House of Representatives was expected to vote on the bill on Tuesday afternoon, followed by the Senate later in the night or on Wednesday morning, and will likely be signed into law by the end of the week.
The bill would cut corporate tax rates to 21 per cent from 35 per cent, which investors are betting will boost profits as well as trigger share buybacks and higher dividend payouts.
“There’s still strong belief that it’s going to happen. But the market is not going to completely relax until they get done,” said Scott Brown, chief economist at Raymond James in St Petersburg, Florida.
Apple fell 1.23 per cent after broker Instinet downgraded the stock to “neutral,” saying the supply/demand balance for the iPhone X suggested little space for raise estimates for the next quarter.
Apple’s drop weighed the most on the S&P 500 technology sector, which dropped 0.31 per cent. A half-a-per cent drop in Facebook and Microsoft also dragged down the index and weighed on the market.
At 9:50 am ET (1450 GMT), the Dow Jones Industrial Average was down 48.75 points, or 0.2 per cent, at 24,743.45 and the S&P 500 was down 2.9 points, or 0.11 per cent, at 2,687.26.
The Nasdaq Composite was down 19.95 points, or 0.29 per cent, at 6,974.81. The index briefly topped 7,000-point mark on Monday for the first time, after rallying along with the broader market on rising hopes of the tax bill being passed.
Another expected outcome of lower taxes is cash repatriation. That, along with a modest rise in interest rates, will leave a lot of cash on corporate balance sheets, which makes a “very strong market for M&A,” said Brown.
After a spate of dealmaking on Monday, Tuesday kicked off with health insurer Humana’s $4.1 billion, or $9 per share, offer for Kindred Healthcare.
Kindred’s shares fell 5.5 per cent to $8.97, from its close of $9.50 on Monday after a run-up on media reports of a deal.
Humana shares were down about 1 per cent.
Five of the 11 major S&P sectors were higher, led by a 0.4 per cent increase in the consumer staples index.
The biggest boost came from Wal-Mart, which jumped 1.51 per cent after Citi upgraded the stock to “buy”, on expectations of the stock will rise further in 2018.
General Motors rose 1 per cent after RBC upgraded the automaker’s stock to “outperform” on expectations of better profitability in 2018.
Navistar International gained more than 10 per cent as higher demand for its buses and trucks drove its quarterly results.
Declining issues outnumbered advancers on the NYSE by 1,301 to 1,250. On the Nasdaq, 1,282 issues rose and 1,206 fell.
