U.S. Tax Concerns Ripple Through Global Markets
U.S. stocks remained under pressure Friday, on track for their first week of declines since September.
Concerns over the prospects of a U.S. tax-overhaul plan interrupted a remarkable stretch of gains for stocks. The Dow Jones Industrial Average posted seven consecutive winning sessions prior to Thursday, when Wall Street closed in the red after Senate Republicans released a tax-reform proposal that delays cutting corporate rates until 2019. Stocks continued to fall Friday, threatening to snap an eight-week winning streak for the Dow industrials, its longest in nearly four years.
On Friday, the Dow slipped 19 points, or 0.1%, to 23443. The S&P 500 and the Nasdaq Composite fell 0.2%.
"Investors are slowly unwinding their expectations from the Trump tax bill," said Margaret Yang, market analyst at CMC Markets. Given the significant run-up in global shares in the past few weeks, traders took cues to take profit, she said.
The Senate plan to overhaul the U.S. tax code differs significantly from the House GOP's in key areas such as the level of top individual tax rates and the timing of a corporate tax-rate cut. Differences among the two proposals caused some traders to question the ability of Republicans to get a bill through to the White House.
Some investors said not to read too much into the recent declines, as profit growth should continue to support stock prices.
"We remain pretty constructive on stocks overall. We think in the U.S. earnings are still pretty strong," said Jeremy Bryan, portfolio manager at Gradient Investments.
The Stoxx Europe 600 was down 0.2%, led by losses in the automotive sector.
European equities extended declines after suffering Thursday their largest percentage drop in more than four months.
"Yesterday we had a few companies that disappointed on earnings and as a result of that stocks came down and that kind of spooked the market a little bit," said Chi Chan, lead portfolio manager at Hermes Eurozone Strategy.
Italian aerospace firm Leonardo SpA suffered the largest share-price drop Friday, falling 20% after it reported Thursday its third-quarter net profit fell 46% and it lowered its outlook for the year.
Mining and financial services stocks bucked the downbeat trend to post gains, after companies including ArcelorMittal reported earnings that beat expectations.
In the bond market, yields on 10-year Treasurys rose for a third consecutive day to 2.367% from 2.333% Thursday, according to Tradeweb. Yields rise as prices fall.
Earlier, stock indexes in Asia ended mostly down.
Japan's Nikkei Stock Average led regional declines with a 0.8% fall as teach-heavy markets extended Thursday's losses, after technology giant Qualcomm signed significant but preliminary deals with three Chinese companies to supply components. The tie-ups fueled fears that other companies in the region that rely on the U.S. firm's patents to develop and make chips would be at a disadvantage.
Elsewhere in Asia, Korea's Kospi was down 0.3%, Hong Kong's Hang Seng ended up 0.1%, and Australia's S&P/ASX 200 was down 0.3%, after the benchmark reached its best levels since 2008 this week.
Kenan Machado and Corrie Driebusch contributed to this article.
(END) Dow Jones Newswires
November 10, 2017 09:55 ET (14:55 GMT)