Published On: Wed, Nov 8th, 2017

Wall Street edges lower as bank stocks weigh

(Reuters) – Wall Street was trading slightly lower on Wednesday as bank stocks came under pressure from a near-flat Treasury yield curve and investors remained focused on the debate among lawmakers over the tax bill.

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., November 1, 2017. REUTERS/Lucas Jackson

U.S. Treasury yields edged higher but the yield curve remained close to its flattest level in a decade, potentially cutting into the profits of banks.

Goldman Sachs was the biggest drag on the Dow while Bank of America weighed on the S&P. The S&P financial sector led the decliners, falling 0.7 percent.

Analysts said a flattening yield curve at a time when the Federal Reserve is hiking rates is a sign that investors are wary about the sustainability of economic growth and inflation in the world’s biggest economy.

Investors are also nervous about the potential outcome of a Republican plan to cut corporate taxes, unveiled last week. As well as slashing the corporate rate to 20 percent from 35 percent, the bill would eliminate many tax breaks and is expected to face opposition from interest groups.

Senate Republican leaders are considering a one-year delay in the implementation of a major corporate tax cut to comply with Senate rules, The Washington Post reported on Tuesday, citing unidentified sources.

“I do expect the tax bill to be watered down,” said Scott Brown, chief economist at Raymond James.

“My concern is that the market has fully factored in that a tax bill is going to come to pass and this is still a very difficult road to get this done and there’s not a whole lot of time.”

Republicans are yet to score a major legislative win since Trump took office in January, even though the party controls both chambers of Congress as well as the White House.

The S&P has risen about 21 percent since the election of President Donald Trump, partly on the back of his promises to cut taxes and other business-friendly measures.

At 9:44 a.m. ET (1344 GMT), the Dow Jones Industrial Average was down 26.57 points, or 0.11 percent, at 23,530.66, the S&P 500 was down 2.71 points, or 0.10 percent, at 2,587.93.

The Nasdaq Composite was down 3.34 points, or 0.05 percent, at 6,764.44.

Defensive sectors such as real estate and consumer staples were the top two gainers.

Shares of Snapchat operator Snap fell 10.1 percent in trading after China’s Tencent took a 12 percent stake. The stock had fallen nearly 20 percent in premarket trading, a day after Snap reported much-slower-than expected advertising revenue and user growth.

Take-Two Interactive Software rose 11.7 percent after the videogame maker gave a stronger-than-expected revenue forecast for the holiday quarter.

Regeneron Pharmaceuticals was up 4.9 percent, after the drugmaker reported a better-than-expected quarterly profit.

Declining issues outnumbered advancers on the NYSE by 1,423 to 1,134. On the Nasdaq, 1,431 issues fell and 1,034 advanced.

Reporting by Tanya Agrawal; Editing by Arun Koyyur

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