Wall Street treads water on continued tax jitters

Wall Street treads water on continued tax jitters

NYSE Nov13
Traders work on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

NEW YORK: Wall Street shrugged off early losses on Monday (Nov 13), narrowly eking out a positive finish despite continued investor worries that long-promised US corporate tax cuts may be delayed.

The positive close, which may have been helped by prospects for reforms to bank regulations, left stocks just above the flat line after two consecutive trading sessions in the red.

The weakness on Wall Street began on Thursday after Senate Republicans unveiled their version of pending tax overhaul which would delay steep cuts in the corporate tax rate until 2019.

Hopes for a tax cut, which would reduce the corporate rate to 20 per cent from 35 per cent, have helped Wall Street rally consistently since President Donald Trump's election victory last year.

At the close, the Dow Jones Industrial Average rose 17.49 points (0.07 per cent) to finish at 23,439.70. The broader S&P 500 and tech-heavy Nasdaq each gained 0.10 per cent to close at 2,584.84 and 6,757.60, respectively.

A sharp drop in shares for General Electric, which unveiled a much-anticipated turnaround plan on Monday, made it the Dow's biggest loser.

"I don't think investors are expecting a lot from this Congress," Maris Ogg of Tower Bridge Advisors told AFP. "I don't think we're going to get tax reform."

Trump weighed into the fraught tax reform efforts again on Monday, using Twitter to call on lawmakers to cut the top individual rate to 35 per cent from 39.6 per cent. This put him at odds with proposals from the Senate and House of Representatives, which call for top rates above 35 per cent.

However, investors who have been cheered by Trump's promises to slash regulation, got a bit of a boost by news the Senate Banking Committee reached a bipartisan agreement to reform banking regulations to ease the burden on smaller community banks.

The committee proposes raising the threshold for banks subject to the regulations to those with assets over US$250 billion, up from US$50 billion currently.

Shares in GE sank more than seven per cent on Monday, with investors apparently not impressed with the plans to revive the industrial conglomerate. The company's share price closed at its lowest in more than five years at US$19.02.

GE plans thousands of job cuts and divestments of US$20 billion in assets over two years to help it focus on core businesses in aviation, health care and energy.

Oil stocks flatlined along with crude prices, which finished up two cents a barrel in New York. Exxon Mobil finished less than a tenth of a point lower while Chevron finished less than a tenth of a point higher.

Source: AFP/de