NEW YORK (Reuters) – Wall Street’s main indexes dipped on Wednesday, pausing after recent record highs as both houses of Congress approved a long-anticipated tax overhaul.
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 a lull, given stocks have already priced in approval of the tax bill.
“There’s not as much upward movement as there was last week,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “As people sharpen their pencils and figure out which companies will benefit (from the tax bill), and companies start talking about that themselves, I think we’ll see larger moves in share prices.”
The Dow Jones Industrial Average fell 28.1 points, or 0.11 percent, to 24,726.65, the S&P 500 lost 2.22 points, or 0.08 percent, to 2,679.25 and the Nasdaq Composite dropped 2.89 points, or 0.04 percent, to 6,960.96.
Four of the 11 major S&P sectors ended higher, led by a 1.4 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 saw a 0.6-percent rise. The sector is considered by some analysts to be the biggest beneficiary of lower taxes. AT&T gained 1.3 percent.
The Dow Jones Transport Index jumped 0.9 percent to a record high close, helped by a surge in FedEx. The company’s shares were up 3.5 percent and earlier in the session touched a record high, a day after it reported a stronger-than-expected quarterly profit.
Technology stocks, expected to benefit the least from lower taxes, were down 0.1 percent on the S&P 500. Chipmaker Micron was up 4.0 percent after strong results and forecast.
The consumer staples index fell 0.4 percent, weighed by a 2.5-percent slide in Philip Morris International Inc.
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 1.01-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.
Volume so far on U.S. exchanges was 6.17 billion shares, compared to the 6.84 billion average for the full session over the last 20 trading days.
Additional reporting by Sruthi Shankar in Bengaluru; Editing by James Dalgleish and Nick Zieminski