Stocks Slip as Tax Plans, Earnings Come Into Focus

By Riva Gold Features Dow Jones Newswires

Global stocks inch lower

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-- Bank shares under pressure

-- Snap shares fall after earnings

Global stocks edged lower in muted trading Wednesday, with investors largely focused on a handful of corporate results and prospects for a U.S. tax overhaul.

The Dow Jones Industrial Average fell 14 points, or less than 0.1%, to 23543 shortly after the opening bell. The S&P 500 declined 0.1% after snapping a five-session winning streak Tuesday, and the Nasdaq Composite added less than 0.1%.

Earnings growth has helped propel major indexes to fresh all-time highs this year, but some investors and analysts have said future gains could be limited because of high expectations for continued profit growth.

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Shares of Snap declined 15% after its quarterly results fell short of expectations, though the company disclosed that Chinese tech giant Tencent Holdings bought a 12% stake. Shares were down as much as 20% in after-hours trading Tuesday.

Another high-profile technology firm that went public this year, Roku, is scheduled to report earnings for the first time as a public company after the market closes Wednesday.

Humana shares declined 4.8% after the health insurer said profit fell in its latest quarter, as the firm trimmed its workforce and earnings from its health-care-services business dropped.

Time Warner was also among the biggest decliners in the S&P 500. Shares fell 3% after a top AT&T executive warned for the first time that the company is unsure about the timing of its planned takeover of Time Warner.

Bank shares continued to lag behind Wednesday, hit by a shrinking gap between short and long-dated bond yields. The U.S. yield curve, or the gap between two and 10-year Treasury yields, is at its flattest since 2007, according to strategists at Deutsche Bank. The S&P 500 financial sector fell 0.7%.

Lower long-term government bond yields and a flatter yield curve tend to hurt lenders' profits, since banks earn money on the difference between what they pay on deposits and what they charge to lend money.

Long-dated bond yields have come under modest pressure in recent sessions amid concerns that disagreements could force the GOP to make changes to its tax bill and slow down plans to pass it by the year's end.

A year after the U.S. presidential election, investors have realized that anything related to tax reform will take longer and look different than what was initially discussed, said Jonathan Mackay, investment strategist at Schroders.

"We do see a high probability for a tax cut, but it will probably be different from what we've seen from the Republican plan so far," he added.

The yield on the 10-year U.S. Treasury note inched up to 2.315 Wednesday, according to Tradeweb, from 2.309%. Yields rise as bond prices fall.

Bank stocks also weighed on the Stoxx Europe 600, which declined 0.3%. European lenders fell after a downbeat report from France's Crédit Agricole. The sector is down roughly 3.5% so far this quarter -- the worst performing group in the region.

Earlier Wednesday, Japan's Nikkei Stock Average edged down 0.1% from a near 26-year high. Hong Kong's Hang Seng Index shed 0.3%, but shares of China Literature nearly doubled on their first day of trading amid the global frenzy for technology stocks.

Amrith Ramkumar contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

November 08, 2017 11:43 ET (16:43 GMT)