NEW YORK: Wall Street shrugged off early losses on Monday, 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 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 percent from 35 percent, have helped Wall Street rally consistently since President Donald Trump’s election victory last year.
At the close, the Dow Jones Industrial Average rose less than a tenth of a point to finish at 23,439.55. The broader S&P 500 and tech-heavy Nasdaq each gained 0.1 percent 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 percent from 39.6 percent. This put him at odds with proposals from the Senate and House of Representatives, which call for top rates above 35 percent.
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 $250 billion, up from $50 billion currently.
Shares in GE sank more than seven percent 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 $19.02.
GE plans thousands of job cuts and divestments of $20 billion in assets over two years to help it focus on core businesses in aviation, health care and energy.