NEW YORK, Nov 8 ― Wall Street was trading slightly lower today as bank stocks came under pressure from a near-flat Treasury yield curve and investors remained focused on the debate among lawmakers over the tax bill.
US Treasury yields edged higher but the yield curve remained close to its flattest level in a decade, potentially cutting into the profits of banks.
Goldman Sachs was the biggest drag on the Dow while Bank of America weighed on the S&P. The S&P financial sector led the decliners, falling 0.7 per cent.
Analysts said a flattening yield curve at a time when the Federal Reserve is hiking rates is a sign that investors are wary about the sustainability of economic growth and inflation in the world’s biggest economy.
Investors are also nervous about the potential outcome of a Republican plan to cut corporate taxes, unveiled last week. As well as slashing the corporate rate to 20 per cent from 35 per cent, the bill would eliminate many tax breaks and is expected to face opposition from interest groups.
Senate Republican leaders are considering a one-year delay in the implementation of a major corporate tax cut to comply with Senate rules, The Washington Post reported yesterday, citing unidentified sources.
“I do expect the tax bill to be watered down,” said Scott Brown, chief economist at Raymond James.
“My concern is that the market has fully factored in that a tax bill is going to come to pass and this is still a very difficult road to get this done and there’s not a whole lot of time.”
Republicans are yet to score a major legislative win since Trump took office in January, even though the party controls both chambers of Congress as well as the White House.
The S&P has risen about 21 per cent since the election of President Donald Trump, partly on the back of his promises to cut taxes and other business-friendly measures.
At 9:44am ET (1344 GMT), the Dow Jones Industrial Average was down 26.57 points, or 0.11 per cent, at 23,530.66, the S&P 500 was down 2.71 points, or 0.10 per cent, at 2,587.93.
The Nasdaq Composite was down 3.34 points, or 0.05 per cent, at 6,764.44.
Defensive sectors such as real estate and consumer staples were the top two gainers.
Shares of Snapchat operator Snap fell 10.1 per cent in trading after China’s Tencent took a 12 per cent stake. The stock had fallen nearly 20 per cent in premarket trading, a day after Snap reported much-slower-than expected advertising revenue and user growth.
Take-Two Interactive Software rose 11.7 per cent after the videogame maker gave a stronger-than-expected revenue forecast for the holiday quarter.
Regeneron Pharmaceuticals was up 4.9 per cent, after the drugmaker reported a better-than-expected quarterly profit.
Declining issues outnumbered advancers on the NYSE by 1,423 to 1,134. On the Nasdaq, 1,431 issues fell and 1,034 advanced. ― Reuters