The Dow Jones Industrial Average recovered from early losses to close at a fresh high, as investors assessed House Republicans' proposal for the biggest tax code overhaul in decades.
The Dow industrials fell more than 80 points after a detailed summary of the tax plan was reported, but the blue-chip index rallied later in the session. Declines in shares of home builders and other consumer-discretionary stocks kept pressure on the S&P 500, which eked out a slight gain for the day.
Shares of financial companies extended gains toward the close, helping major indexes recoup earlier losses. A lower corporate tax rate, a key item in Republicans' tax plan, would immediately boost banks' profits if passed, analysts said.
"A lot of financial companies pay quite close to the full [tax] rate, so we'd expect that positive sentiment to keep lifting that space," said R.J. Grant, director of equity trading at KBW Inc.
Financial stocks in the S&P 500 rose 0.9%.
Also late in the session, President Donald Trump formally announced that he would nominate Federal Reserve governor Jerome Powell to be the next chairman of the central bank, as expected.
The Dow industrials gained 81.25 points, or 0.3%, to 23516.26, its third consecutive day of gains and 55th record close of the year. The S&P 500 rose 0.49 points, or less than 0.1%, to 2579.85 and the Nasdaq Composite shed 1.59 points, or less than 0.1%, to 6714.94.
The tax plan -- long anticipated by investors as a potential boost for profits at American companies -- aims to permanently chop the corporate tax rate, compress the number of individual income tax brackets and eventually repeal the taxes paid by large estates.
Components for individual taxpayers, such as limits on the home mortgage-interest deduction and caps on property tax deductions, contributed to moves among consumer stocks, specifically home builders, analysts said.
"There's a general disappointment in the individual side of things,"
said Yousef Abbasi, global market strategist at JonesTrading. "The biggest tax cut went to the corporations."
Shares of consumer-discretionary stocks in the S&P 500 slid 0.8%.
Home builder Lennar fell $1.86, or 3.3%, to $55.10, while PulteGroup declined 32 cents, or 1.1%, to 30.09. Home-improvement companies were dragged down too, with Home Depot shares falling 2.67, or 1.6%, to 162.71 and Lowe's declining 3.27, or 4.1%, to 76.65.
Investors and analysts cautioned to not read too deeply into Thursday's market moves since the tax plan could change as Republicans work to push it through the House and the Senate in the coming weeks. And if the plan falters, similar to Republicans' earlier attempts to overhaul the Affordable Care Act, analysts expect a muted reaction.
"If taxes don't get done, it won't have a meaningful impact on markets," said Krishna Memani, chief investment officer of OppenheimerFunds. "Markets have rallied this year because of global growth and earnings."
Other moves followed mixed quarterly results from U.S. companies.
Shares of Newell Brands, the maker of Sharpie markers and Rubbermaid containers, slumped 10.99, or 27%, to 30.01 after the company cut its earnings guidance for the year following a weak back-to-school season.
Facebook, which remains under scrutiny over alleged Russian propagandists' activity during the election, fell 3.74, or 2%, to 178.92 after reporting a jump in profit.
Shares of Blue Apron dropped 87 cents, or 19%, to 3.80 -- an all-time low -- after the meal-kit company posted a loss and shed customers in the third quarter. The company went public in June at $10 a share.
Elsewhere, the Stoxx Europe 600 fell 0.5%.
In Asia, China's Shanghai Composite Index fell 0.4%, while Australia's S&P/ASX 200 declined 0.1%.
Japan was the region's notable outperformer, with a rally in the last hour of trading sending the Nikkei Stock Average up 0.5% to another 21-year high.
--Akane Otani contributed to this article
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
November 02, 2017 17:23 ET (21:23 GMT)