NEW YORK: US stocks opened sharply lower on Thursday, following the declines in Asian and European markets, amid uncertainty over the fate of the US tax overhaul making its way through Congress.
After all three major indexes hit record closes on Wednesday, with the Dow finishing at its fifth straight all-time high, they all retreated at the start.
“A sure sign of a market that has gotten overextended on a short-term basis is the palpable angst that arises from the sudden shift in tone,” Briefing.com analyst Patrick O’Hare said.
About 15 minutes into the trading day, the Dow Jones Industrial Average had dropped 0.5 percent to 23,447.05, while the broader S&P 500 fell 0.6 percent to 2,578.66.
The tech-heavy Nasdaq lost nearly 1.0 percent to 6,723.9.
Investors remained focused on the possibility of a major tax cut — the prospects of which have boosted markets to multiple records over the past year.
The Senate is expected to unveil its version of the tax reform bill later in the day, amid increasing criticism about the structure and purported benefits of the House Republican version.
Stunning defeats in state elections this week have cast further doubts on the Republicans’ ability to deliver massive corporate tax cuts.
Analysts at Schwab said “the global market rally (is) appearing to pause amid exacerbated US tax-reform uncertainty.”
However, O’Hare downplayed the tax reform’s impact on the markets, and said it is more likely “the abrupt reversal in the Nikkei intraday has probably triggered an inclination among traders playing the US market to take some money off the table.”
Japan’s market reversed course to close lower after hitting a 26-year high, and most other Asian indexes fell as well.
AT&T and TimeWarner remain in the spotlight after sources confirmed that US anti-trust authorities have said the companies must sell either cable service DirecTV or Turner — which includes CNN — to win approval for their proposed merger.
The news drew intense criticism and charges of political payback, since President Donald Trump has engaged in a war of words with the news media in general and CNN in particular.
AT&T shares dropped by nearly 1.0 percent to $33.76, while TimeWarner fell 1.8 percent to $86.93.
In the troubled retail sector, Kohl’s shares dropped 4.6 percent to $38.99 after the company reported weaker-than-expected earnings, while Macy’s fell 4.7 percent to $18.34 amid tepid same-store sales.
The only major US data release showed a bigger-than-expected jump in first-time claims for unemployment benefits, up 10,000 to 239,000 in the latest week, but economists noted that the weekly data are “wildly erratic.”
The more stable four-week moving average is at its lowest level in nearly 45 years, a sign of the strength of the jobs market.
Source: Brecorder.com
