Stocks End Mixed After Bouncing Around for Much of the Day


U.S. stocks bounced around Wednesday and finished little changed after Congress passed the Republican-sponsored tax bill. Smaller companies fared the best.

The Senate narrowly passed the tax bill after midnight and the House, which passed a similar bill Tuesday but had to go back and make changes, followed suit in the afternoon. President Donald Trump is expected to sign the bill soon.

Smaller companies rose, as they might benefit the most from the corporate tax cut. Bond yields rose, which hurt companies that pay big dividends, such as utilities.

Stocks have jumped over the last four weeks as the tax legislation moved closer to passing, but they haven’t done much over the last two days as Congress voted on the bill. Stocks set all-time highs Monday, slipping on Tuesday.

It’s been a very strong year for the market, and ordinarily investors might sell some of their holdings in late December and take some profits before making new investments in January. But with a tax bill passing at year’s end, TD Ameritrade Chief Market Strategist JJ Kinahan said that pattern might not hold.

“This could be a year where you see the selling pressure at the beginning of the year because people are delaying their selling, waiting for a better tax environment,” he said. “There are always unintended consequences with tax plans.”

The Standard & Poor’s 500 index lost 2.22 points, or 0.1 percent, to 2,679.25. The Dow Jones industrial average fell 28.10 points, or 0.1 percent, to 24,726.65. The Nasdaq composite slid 2.89 points, or less than 0.1 percent, to 6,960.96. The Russell 2000 index of smaller-company stocks rose 3.33 points, or 0.2 percent, to 1,540.08.

Investors have sent stocks higher in recent weeks as the tax bill’s prospects improved. It would cut the corporate tax rate to 21 percent from 35 percent, which could increase corporate profits. Other provisions are intended to encourage companies to invest more money in their businesses.

In a note earlier this week, after the bill was largely complete, Barclays analyst Maneesh Deshpande said the bill will reduce the effective tax rate for S&P 500 companies to 20.7 percent from 26 percent because of changes taxation for profits made overseas. He said household goods companies, banks and industrial companies will get the largest tax cuts, while technology and health care companies won’t see as much of a difference.

FedEx raised its annual profit forecast after saying its holiday season is off to a strong start. FedEx also said the tax bill could boost its profit this year by $4.40 to $4.50 a share because of changes in its deferred tax liabilities as well as a reduced tax rate. Its stock climbed $8.53, or 3.5 percent, to $251.07.

Bond prices fell further. The yield on the 10-year Treasury note rose to a nine-month high of 2.50 percent from 2.46 percent. When yields rise, it’s good for banks because they can charge higher interest rates on mortgages and other kinds of loans.

AT&T rose 50 cents, or 1.3 percent, to $38.55. The company said last month that it would invest $1 billion domestically if the tax measure was adopted.

Philip Morris International sank after Reuters reported that some employees who have worked on clinical studies of the company’s iQOS device, which heats tobacco without burning it, question the quality of that research. The company has spent years working on iQOS and asked the Food and Drug Administration to approve it at the end of 2016 based in part on those trials.