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Wall Street extends loss after report of gradual tax cuts

Posted by: Admin | Posted on: October 30th, 2017 | 0 Comments

(Reuters) – U.S. stocks extended losses in early afternoon trading on Monday after a report that the House of Representatives was discussing “a gradual phase-in” for President Donald Trump’s corporate tax cut plans.

The schedule would have the rate reach 20 percent in 2022, the Bloomberg report said. Under the plan, the rate may be reduced from its current 35 percent rate by three percentage points a year starting in 2018.

Stocks took a hit following the report as it seemed that the administration is watering down its tax cut proposals, said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

Investors appeared to shrug off charges against Paul Manafort, a former campaign manager of President Donald Trump, and one of his affiliates – the first in connection with a probe into possible Russian meddling in the 2016 U.S. presidential election.

Earlier in the session, the Nasdaq Composite hit a record high after Apple (AAPL.O) shares jumped on research notes pointing to strong demand for the iPhone X.

The healthcare sector was under pressure after Merck (MRK.N) dipped 6.13 percent, setting up the stock for its biggest two-day decline, after the company said it had withdrawn an application for European use of its key cancer immunotherapy.

With the third-quarter earnings season more than half-way through, nearly 74 percent of the SP 500 companies that have reported earnings so far, have topped profit expectations, compared with 72 percent overall the past four quarters.

Investors also awaited the announcement on the nomination of the new Federal Reserve chief, expected on Thursday.

Trump is likely to pick Federal Reserve Governor Jerome Powell as the next chair of the U.S. central bank, a source familiar with the matter said on Monday.

At 12:23 p.m. ET, the Dow Jones Industrial Average .DJI was down 90.63 points, or 0.39 percent, at 23,343.56, the SP 500 .SPX was down 11.71 points, or 0.45 percent, at 2,569.36 and the Nasdaq Composite .IXIC was down 21.10 points, or 0.31 percent, at 6,680.17.

Seven of the 11 major SP indexes were lower, led by losses in healthcare .SPXHC, financials .SPSY and consumer staples .SPLRCS stocks.

Mondelez (MDLZ.O) fell 2 percent ahead of its earnings report, expected after the bell.

General Motors (GM.N) dipped 3 percent after Goldman Sachs downgraded the company’s stock to “sell” from “neutral”.

Advanced Micro Devices (AMD.O) slumped 8.15 percent after Morgan Stanley downgraded the stock to “underweight” from “equalweight”.

Declining issues outnumbered advancers on the NYSE by 1,707 to 1,146. On the Nasdaq, 1,942 issues fell and 872 advanced.

Reporting by Sruthi Shankar; Editing by Saumyadeb Chakrabarty

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