Benchmarks finished in the red on Thursday following concerns over a likely delay in the Trump administration’s tax cut plans. The Senate Finance Committee released a tax plan which aims to reduce corporate tax rate to 20% but not before 2019, in contrast to the 2018 deadline proposed by the House Republicans. Although, investors turned jittery following concerns that tax cut may be delayed, markets curtailed some of the day’s declines after the House Ways and Committee passed a bill to reframe the tax reforms.
The Dow Jones Industrial Average (DJIA) decreased 0.4%, to close at 23,461.94. The S&P 500 Index (INX) fell 0.4% to close at 2,584.62. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,750.05, losing 0.6%. A total of 7.4 billion shares were traded on Thursday, higher than the last 20-session average of 6.6 billion shares. Decliners outnumbered advancers on the NYSE by a 1.67-to-1 ratio. On Nasdaq, a 1.62-to-1 ratio favored declining issues. The CBOE VIX decreased 1.1% to close at 9.78.
What Dragged Benchmarks Downward?
On Thursday, a version of the tax plan was released by the Senate Finance Committee. The Senate version differed from that of the House panel's in several ways. Unlike the House Republicans’ tax proposals which focus on reducing corporate tax rate from 35% to 20%, the Senate version supports a similar tax cut only by2019. Also, per House Republicans, the top individual tax rate would be 39.6%, whereas the Senate version puts the ceiling rate at 38.5%.
Worries over a possible delay in tax cut plans weighed on investor sentiment. Although, some of the day’s losses were curtailed after the House Ways and Committee approved a Bill to recast the tax reforms, all the three key U.S. indexes registered their worst trading day in two weeks. Both the Dow and the S&P 500 posted their largest one-day percentage falls since Oct 25, while the Nasdaq registered its worst one-day performance since Oct 23.
The day’s performance could have been much worse if the the tax plan Bill approved by the House Ways and Committee did not offer some positives for the investors. Among the Bill’s key highlights were proposals to reduce corporate taxes by 2018, reducing the number of tax brackets from seven to four and a gradual repeal of the estate tax.
Key Earnings For the Day
On the earnings front, shares of TransDigm Group Incorporated (TDG - Free Report) fell 6.8% after the reporting fiscal fourth quarter net sales of $923.9 million, missing the Zacks Consensus Estimate of $967 million. TransDigm was the biggest decliner of the Industrial Select Sector SPDR (XLI), which fell 1.3%. Industrial sector was the biggest decliner among the S&P 500 sectors. TransDigm holds a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Separately, Office Depot, Inc’s (ODP - Free Report) shares rose 7.6% after the company posted third-quarter revenue of $2.620 billion in the period, beating the Zacks Consensus Estimate of $2.612 billion. Its earnings per share (EPS) came in line with the Zacks Consensus Estimate.
Stocks That Made Headlines
Nordstrom Stock Falls Despite Q3 Earnings & Sales Beat
Nordstrom Inc. (JWN - Free Report) reported robust third-quarter fiscal 2017 results, wherein both its earnings and sales outpaced the Zacks Consensus Estimate. (Read More)
Office Depot Q3 Earnings Meet, Sales Beat, Stock Up
Office Depot, Inc. (ODP - Free Report) delivered in-line earnings in the third quarter. (Read More)
News Corporation Beats on Q1 Earnings & Revenues
News Corporation (NWSA - Free Report) reported fourth straight quarter of positive earnings surprise, when it posted first-quarter fiscal 2018 results. (Read More)
Dillard's Tops Q3 Earnings & Sales, Stock Jumps 12%
Dillard's Inc. (DDS - Free Report) posted robust third-quarter fiscal 2017 performance. (Read More)
Lions Gate's Q2 Earnings & Revenues Improve Y/Y
Lions Gate Entertainment Corp. (LGF.A - Free Report) reported second-quarter fiscal 2018 quarterly numbers, wherein both top and bottom lines. (Read More)
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