MARKET SNAPSHOT: Dow Snaps Seven-session Winning Streak On Tax-delay Jitters

By Sue Chang and Anora M. Gaudiano, MarketWatch Features Dow Jones Newswires

Technology and industrials take the brunt of selloff

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U.S. stocks closed lower Thursday in their worst session in two weeks with the Dow snapping a seven-day win streak on worries over a possible delay in much-anticipated corporate tax cut. However, main indexes trimmed losses after the House Ways and Committee approved a bill to overhaul the tax code, setting up a vote by the full House.

How did stock indexes fare?

The S&P 500 fell 9.76 points, or 0.4%, to 2,584.62 and the Dow Jones Industrial Average fell 101.42, or 0.4%, to 23,461.94. Both indexes logged their biggest one-day percentage drop since Oct. 25.

Technology stocks were among the biggest losers with the Nasdaq Composite Index down 39.07 points, or 0.6%, to 6,750.05, its biggest one-day percentage decline since Oct. 23.

A popular measure of implied volatility, as measured by the CBOE Volatility index , soared as much as 20%, but pared gains to be up 11% at 10.86, still below its historic average at around 19 but pointing to elevated levels of market anxiety.

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What drove the market?

Stocks were initially battered by fears that tax cuts would be delayed as 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 defer implementing a 20% corporate tax until 2019, versus next year, as proposed by House Republicans.

But some of those jitters were soothed when the House Ways and Committee passed the bill put forth by the Republicans (http://www.marketwatch.com/story/tax-reform-advances-a-step-as-house-committee-passes-bill-2017-11-09) which proposes cutting corporate taxes to 20% from 35%, repeals the estate tax over time, and revise the existing seven tax brackets into four. The bill will move to the House floor for a vote, possibly as soon as next week.

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 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)

(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)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.

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 55%. 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).

Office Depot Inc. (ODP) shares jumped 7.6% 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 54% 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 1.3% after beating profit and sales forecasts.

Shares of Macy's Inc.(M) surged 11% as the retailers earnings came ahead of expectations.

Shares of Snap Inc.(SNAP) fell 4.1% 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 8.4% after the health-products maker reported better-than-expected earnings.

What data were 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.

How did other markets perform?

Asian markets closed mixed, with Japan's Nikkei 225 index turning a 2% gain at midday into a 0.2% loss by the close, while all European markets closed in the red (http://www.marketwatch.com/story/european-stocks-head-for-3rd-loss-as-burberry-plunges-2017-11-09).

Crude-oil prices (http://www.marketwatch.com/story/oil-prices-steady-near-2-year-high-as-geopolitics-stir-supply-concerns-2017-11-09) were trading higher and gold settled stronger, while the ICE Dollar Index slide 0.4%.

--Mark DeCambre and Sara Sjolin contributed to this article

(END) Dow Jones Newswires

November 10, 2017 03:42 ET (08:42 GMT)