Wall St. Takes a Breath as Tax Bill Clears Congress

Wall Street’s main indexes were little changed on Wednesday, taking a breather after a month-long rally as both houses of Congress approved a tax overhaul in a long-anticipated vote.

The Republican-controlled U.S. House of Representatives gave final approval to a sweeping tax bill, which will be the largest overhaul of the U.S. tax code in 30 years. The Senate had already voted in favor of the bill.

The proposed changes include cutting the corporate tax rate to 21 percent from 35 percent from Jan. 1, which could boost company earnings and pave the way for higher dividends and stock buybacks.

The S&P 500 has climbed about 4.5 percent since mid-November, led by a rally in sectors such as transport, banks and others that are expected to benefit the most from lower taxes.

Some analysts say the market has reached an end-of-year lull, given stocks have already priced in approval of the tax bill.

“(The market) rallied hard last week on the assumption that the tax reform package would pass, which it did,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “The last looming issue is the potential of a government shutdown, but the Democrats appear to be retreating from the whole thing.”

The Dow Jones Industrial Average fell 35.72 points, or 0.14 percent, to 24,719.03, the S&P 500 slipped 1.41 points, or 0.05 percent, to 2,680.06 and the Nasdaq Composite dropped 2.63 points, or 0.04 percent, to 6,961.22.

Six of the 11 major S&P sectors were higher, led by a 1.2 percent gain in energy. Energy stocks were fueled as oil prices rose about 1 percent, supported by a larger-than-expected drop in U.S. inventories.

Telecoms also saw a 1.2 percent rise. The sector is considered by some analysts to be the biggest beneficiary of lower taxes. AT&T gained 1.2 percent.

The Dow Jones Transport Index jumped 1.1 percent, earlier hitting a record high, helped by a surge in FedEx. The company’s shares were last up 3.2 percent and earlier in the session touched a record high, a day after it reported its results and gave its forecast.

Technology stocks, expected to benefit the least from lower taxes, were down 0.2 percent on the S&P 500. Chipmaker Micron was up 4.3 percent after announcing strong results and forecast.

The consumer staples index fell 0.5 percent, weighed by a 2.9 percent slide in Philip Morris.

Reuters reported former Philip Morris employees detailed irregularities in clinical trials for the company’s e-cigarette, due to be voted on by the U.S. FDA next year.

Advancing issues outnumbered declining ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored advancers.