Stocks Fall on Tax Concerns as Senate Readies Plan: Markets Wrap

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U.S. stocks sold off from near record levels as investors appeared to be pessimistic about the prospects for tax reform as the Senate prepares to unveil its plan Thursday afternoon, while the euro advanced on higher inflation expectations in Europe. The dollar fluctuated and and crude turned higher.

The S&P 500 Index retreated after closing within six points of 2,600, and all major U.S. equity gauges were lower. Banks and small-caps were lower again as tax writers scramble to finalize details of their proposals, while technology shares were among the leading decliners. Volatility spiked as reports out of Washington indicated that Congress could struggle to meet a Dec. 8 deadline to fund government spending.

“Policy makers hope to pass a tax plan by Thanksgiving,” said Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank. “But the looming political trade-offs and divergence in House and Senate proposals argue this deadline is nothing more nothing short of a holiday miracle.”

European equities fell the most since August as basic-resources shares dropped following a decline in industrial-metals prices. Inflation concerns also crept into markets, as the European Commission was the latest authority to raise growth forecasts. Sterling fluctuated as Brexit talks resumed, while oil looked to halt a two-day drop.

President Donald Trump’s 11-day Asia tour brought him to Beijing, where he said China is taking advantage of American workers and companies with unfair trade practices, but blamed the problem on his predecessors in the White House. It’s been a year since Trump’s election win and investors are taking stock of his promises to get tough on trade, cut taxes and slash regulations.

Read more: From Circuit Breaker to Record Maker, Trump’s Year in Charts

Meanwhile, Brexit talks resume Thursday in Brussels with no indication that a breakthrough is in reach. The EC said economic growth in the U.K. is headed for a prolonged slowdown even as the euro-area economy is forecast to expand at the fastest pace in a decade this year. And in the U.S., tax reform discussions continue. The Senate is due to release a “conceptual mark” of a proposal Thursday, according to a spokeswoman.

Terminal users can read more in our Markets Live blog.

Here are key events to watch out for this week:

  • The Philippines’ central bank announces its rate decision on Thursday.
  • A number of central bankers are scheduled to speak today including the ECB’s Benoit Coeure, Yves Mersch, Vitro Constancio and Villeroy de Galhau and Sabine Lautenschlager

And these are the main moves in markets:

Stocks

  • The S&P 500 Index was down 0.4 percent to 2,585.12 as of 10:25 a.m. in New York, while the tech-heavy Nasdaq 100 Index dropped 0.5 percent.
  • The Stoxx Europe 600 Index sank 1.1 percent, the biggest decrease since July. 
  • The MSCI Asia Pacific Index gained less than 0.1 percent to the highest in about 10 years.
  • The MSCI Emerging Market Index dipped 0.2 percent.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.2 percent. 
  • The euro gained 0.3 percent to $1.1634, the largest gain in a week. 
  • The British pound fell less than 0.1 percent to $1.3111. 
  • The Japanese yen gained 0.3 percent to 113.58 per dollar.

Bonds

  • The yield on 10-year Treasuries was little changed at 2.3345 percent.
  • Germany’s 10-year yield climbed five basis points to 0.378 percent.
  • Britain’s 10-year yield advanced four basis points to 1.260 percent.

Commodities

  • West Texas Intermediate crude increased 1 percent to $57.39 a barrel.
  • Gold gained 0.5 percent to $1,287.26 an ounce, the highest in three weeks.
  • Copper fell 0.7 percent to $3.08 a pound, the lowest in a month.

— With assistance by Andreea Papuc

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