U.S. Stocks Mixed, Dollar Lower on Tax Plan Detail: Markets Wrap

Updated on
  • Homebuilders routed on plan to cap mortgage interest deduction
  • Powell set to be tapped for Fed, tax cut details expected
BOE Raises Key Interest Rate to 0.5% in 7-2 Vote

U.S. stocks eked out a gain in the final half hour of trading, the dollar slumped and Treasuries advanced as investors reacted to details of the Republican plan to cut taxes.

The S&P 500 Index ended higher on the strength of gains in financial and real-estate shares that advanced amid a drop in 10-year Treasury yields. Investors parsed the tax plan details for winners and losers, giving a boost to small caps on speculation they will benefit most from a proposal to cut the corporate tax rate. The housing sector was walloped on changes to how mortgage interest will be treated. 

Facebook Inc. lost more than 2 percent after earnings disappointed, weighing on tech shares before Apple Inc. reports later Thursday. Time Warner Inc. tumbled on a Dow Jones report that the Justice Department may reject its takeover by AT&T Inc. Newell Brands Inc. sank the most in the S&P 500 on weak earnings.

“Maybe people think there’s not enough things to raise revenue in there, which is going to be bad for the deficit which is bad for the dollar,” Michael O’Rourke, chief market strategist at JonesTrading Institutional Services LLC, said by phone. “This is the House version of the bill, so whatever it is it has to match up with the Senate, and we’ll get a clearer picture.”

Markets showed little reaction to President Donald Trump’s nomination of Jerome Powell to lead the Federal Reserve. The pound slumped and gilts surged after the Bank of England indicated its first rate hike in a decade might be the last for a while. U.S. crude closed at the highest level in more than two years.

House Republican leaders rolled out their version of tax cuts that makes sweeping changes for business and individual rates. The bill would cut corporate tax rate to 20 percent and impose a tax of as much as 12 percent on multinational companies’ accumulated offshore earnings.

Trump nominated Powell to the top job at the U.S. central bank, a decision that was greeted with a shrug by investors who see the Fed governor as a continuity candidate. Powell has generally backed current chair Janet Yellen’s cautious approach to withdrawing stimulus.

Elsewhere, bitcoin extended gains for the fourth consecutive day, hitting $7,000 to establish a fresh record before paring the advance.

Terminal users can read more in our Markets Live blog.

Here are some of the remaining scheduled events this week:

  • Trump starts an 11-day trip to Asia, his first as president, on Friday. Trade and security issues -- particularly North Korea -- will probably be in focus.
  • The slew of earnings releases will culminate with Apple Inc. results.

And these are the main moves in markets:

Stocks

  • The S&P 500 rose less than one point at 4 p.m. in New York.
  • An S&P index of homebuilders sank 2.6 percent, the most since September 2016. Home Depot Inc. lost 1.6 percent.
  • The Nasdaq 100 Index lost 0.2 percent as Facebook Inc. lost 2.1 percent.
  • The Stoxx Europe 600 Index decreased 0.7 percent, the first retreat in more than a week.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3 percent to 1,181.30. 
  • The euro climbed 0.3 percent to $1.1651, the strongest in more than a week. 
  • The British pound decreased 1 percent to $1.311, the weakest in almost four weeks on the biggest tumble in almost 21 weeks. 
  • The Japanese yen was unchanged at 114.18 per dollar, the strongest in about six months.


Bonds

  • The yield on 10-year Treasuries fell three basis points to 2.35 percent, the lowest in two weeks. 
  • Britain’s 10-year yield decreased eight basis points to 1.26 percent, the lowest in more than two weeks on the largest tumble in three months.


Commodities

  • West Texas Intermediate crude rose by 0.4 percent to settle at $54.54 a barrel, the highest since July 2015.
  • Gold futures declined less than 0.05 percent to $1,276.90 an ounce. 
  • Copper decreased 0.6 percent to $3.12 a pound.

— With assistance by Adam Haigh, Sheldon Reback, and Cormac Mullen

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