Technology and industrials take the blunt of selloff
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U.S. stocks retreated Thursday, pulling back from all-time highs as investors expressed disappointment in tax legislation unveiled by Senate Republicans that would delay a cut in the corporate rate until 2019.
What are stock indexes doing?
The S&P 500 fell 12 points, or 0.5%, to 2,581, with seven of the 11 main sectors trading lower. Technology stocks were among the biggest losers with the Nasdaq Composite Index down 52 points, or 0.8%, to 6,737.
The Dow Jones Industrial Average fell 115, or 0.5%, to 23,447.
A popular measure of implied volatility, as measured by the CBOE Volatility index , soared as much as 20%, but pared gains to be up 12.88% to 11.04, still below its historic average at around 19, but pointing to elevated levels of market anxiety.
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What's driving the market?
The Senate Finance Committee on Thursday released its version of a tax plan (http://www.marketwatch.com/story/senate-bill-delays-corporate-tax-cut-doesnt-repeal-estate-tax-2017-11-09) that would delay implementing a 20% corporate tax until 2019, versus next year, as proposed by House Republicans. It also sets a top individual rate of 38.5% instead of the 39.6% in the House plan. The House and Senate versions would need to be reconciled into one bill for President Donald Trump to sign.
Hopes that Trump's administration would deliver a major U.S. tax overhaul--including a business-friendly tax cut--have boosted markets recently.
See:How the Republican tax plan would affect homeowners and buyers (http://www.marketwatch.com/story/trump-claims-hed-be-big-loser-from-tax-plan-how-the-senates-bill-may-differ-from-houses-2017-11-08)
The Federal Reserve isn't factoring the tax bill into its monetary policy forecasts because it is unclear still what will and won't be included, Cleveland Fed President Loretta Mester said on CNBC Thursday morning. "I need to see more of the details," she said. Mester isn't a voting member of the central bank's Federal Open Market Committee this year.
The tax bill written by House Republicans would boost the U.S. deficit by $300 billion more (http://www.marketwatch.com/story/cbo-says-tax-bill-would-increase-deficit-by-17-trillion-2017-11-08) than lawmakers estimated, the Congressional Budget Office said Wednesday. And over a decade, it would increase the deficit by $1.7 trillion, beyond the $1.5 trillion required to meet Senate rules under the recently passed budget.
Read:1 in 5 would see tax hike in a decade under Republican bill, congressional analysis finds (http://www.marketwatch.com/story/one-in-five-would-see-tax-hike-in-a-decade-under-republican-bill-congressional-analysis-finds-2017-11-07).
See also:These states have won the race to the bottom for spending beyond their means (http://www.marketwatch.com/story/new-jersey-is-in-worse-shape-than-illinois-by-this-measure-and-kentucky-is-worse-than-california-2017-11-09)
What are strategists saying?
"A combination of worries about the tax delay and news about Department of Justice's stance on the AT&T deal sparked a mild risk-off day," said Kate Warne, investment strategist at Edward Jones.
"It's a sign that regulatory regime is not quite as favorable as investors first thought, while delays to tax reform means slower growth next year," Warne added.
"There is a lot of division among Republicans in the Congress, especially between those who come from states whose constituents stand to lose under the current proposal. Investors are worried that the tax bill will be delayed," said Mark Kepner, managing director of sales and trading at Themis Trading
Which stocks are in focus?
Roku Inc.(ROKU) shares soared 44%. The video-streaming company in its first earnings report as a public company late Wednesday, posting profit and revenue that both beat forecasts (http://www.marketwatch.com/story/here-are-the-numbers-that-sent-roku-stock-soaring-after-its-first-earnings-report-2017-11-08).
Kohl's Corp. (KSS) shares tumbled 6.1% after lowering its 2018 earnings outlook and reporting quarterly profit that was slightly weaker than expected, though earnings exceeded estimates.
Office Depot Inc. (ODP) shares jumped 7.3% after the firm reported quarterly results that were better than expected (http://www.marketwatch.com/story/office-depot-beats-estimates-despite-hurricane-impact-2017-11-09).
Sage Therapeutics Inc. shares surged 42% after the company said its postpartum-depression therapy (http://www.marketwatch.com/story/sage-therapeutics-stock-surges-50-on-positive-trial-results-in-postpartum-depression-2017-11-09) has positive results in two late-stage clinical trials.
Shares of Vista Outdoor Inc. (VSTO) dropped 28% after the gun and outdoor-sports-products company beat fiscal second-quarter profit expectations (http://www.marketwatch.com/story/vista-outdoors-stock-tumbles-after-sales-miss-and-slashed-outlook-offsets-profit-beat-2017-11-09), but missed on sales and slashed its full-year outlook.
D.R. Horton Inc.(DHI) stock rose 2% after beating profit and sales forecasts.
Shares of Macy's Inc.(M) rose 4.5% as the retailers earnings came ahead of expectations.
After the market closes, Walt Disney Co.(DIS), Nordstrom Inc.(JWN) and Nvidia Corp.(NVDA) are slated to release earnings. News Corp.(NWS.AU)--the owner of MarketWatch--is also on the earnings docket after hours.
Disney earnings preview:It's a transition period for the media and entertainment company (http://www.marketwatch.com/story/disney-earnings-its-a-transition-period-for-the-media-and-entertainment-company-2017-11-01)
Shares of Snap Inc.(SNAP) fell 4.6% after a 15% loss posted on Wednesday that came after the company posted disappointing quarterly results (http://www.marketwatch.com/story/snaps-stock-sinks-as-disappointing-results-outweigh-large-tencent-stake-2017-11-08).
Opinion:The outlook for Snap isn't as gloomy as the stock market suggests (http://www.marketwatch.com/story/the-death-of-snap-is-being-greatly-exaggerated-2017-11-08)
Perrigo Co. PLC(PRGO) jumped 10% after the health-products maker reported better-than-expected earnings.
What's on the economic calendar?
Weekly jobless claims (http://www.marketwatch.com/story/four-week-jobless-claims-average-falls-to-lowest-level-since-march-1973-2017-11-09) for the week ended Nov. 4 rose by 10,000 to 239,000, but the more stable monthly average of claims decreased by 1,250 to 231,250 to the lowest level since March 1973.
See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
What are other markets doing?
Asian markets closed mixed, with Japan's Nikkei 225 index turning a 2% gain at midday into a 0.2% loss by the close.
European markets swung lower (http://www.marketwatch.com/story/european-stocks-head-for-3rd-loss-as-burberry-plunges-2017-11-09), with the Stoxx Europe 600 index down 1.1% at the latest.
Crude-oil prices (http://www.marketwatch.com/story/oil-prices-steady-near-2-year-high-as-geopolitics-stir-supply-concerns-2017-11-09) and gold were trading higher, while the ICE Dollar Index slumping 0.4% to 94.43.
--Mark DeCambre and Sara Sjolin contributed to this article
(END) Dow Jones Newswires
November 09, 2017 15:25 ET (20:25 GMT)