You are using an older browser version. Please use a supported version for the best MSN experience.

Stocks close lower on Senate plan that would delay tax cuts

CNBC logo CNBC 11/9/2017 Fred Imbert and Alexandra Gibbs


Stocks fell Thursday, pulling back from record highs, on worries that tax reform could be delayed until 2019.

The Washington Post reported that a Senate Republican plan could push tax reform back to 2019.

"That's what gave us this new leg down," Art Cashin, the director of floor operations at UBS, said on CNBC's "Squawk Alley."

"There's also some speculation in Washington circles that when the president finishes his trip and comes back, there may be some more legal troubles for members of the cabinet."

The major indexes had recovered some of the losses from earlier in the session prior to the report's release.

The Dow lost 101 points. The S&P 500 shed 0.38 percent, with information technology as the leading decliner. The Nasdaq lagged, falling 0.58 percent.

"We expect short-term momentum to deteriorate temporarily, triggered by technology stocks as they (finally) react to overbought extremes." said Katie Stockton, a chief technical strategist at BTIG. "A buying opportunity is likely to present itself in 2-3 weeks based on former setups of this nature."

Tech is by far the best-performing sector in the S&P 500 this year. The sector is up 37 percent in 2017, boosted by strong earnings from companies in the space.

Stocks posted record closing highs on Wednesday, adding to their already strong gains for the year. The S&P 500, Dow and Nasdaq are all up at least 15 percent in 2017.

"The market is digesting its recent gains," said Mark Luschini, a chief investment strategist at Janney Montgomery Scott. "After a prolonged rally, everyone gets worried that they will be caught off-guard when the music stops."

Also giving investors pause was a decline in risky high-yield bonds. The iShares iBoxx High Yield Corporate Bond exchange-traded fund (HYG) fell 0.5 percent Thursday and has pulled back 1.6 percent over the past month. Wall Street looks at high-yield bonds as a leading indicator for stocks. 

"People are wondering if that's a canary in the coal mine" for stocks, said Janney's Luschini.

Stocks around the world also declined Thursday. The Stoxx 600 — which tracks a broad swath of European equities — fell 1.1 percent. In Asia, the Japanese Nikkei 225 finished 0.2 percent lower. It briefly rose more than 2 percent to hit its highest level since 1991.

Global equities have risen alongside their U.S. counterparts this year as economic conditions around the world have improved.

On the data front, weekly U.S. jobless claims totaled 239,000 last week, above the expected 232,000.

Wholesale trade numbers are slated for release at 10 a.m. in New York.

Later Thursday, Disney, Nvidia, and News Corp. will release their quarterly results. Media stocks have been in the spotlight recently as talks about dealmaking pick up.

Earlier this week, CNBC reported that 21st Century Fox has been in talks to sell most of its company to Disney.

As for chip maker Nvidia, its stock has been on fire this year, rising 95 percent. Earnings have been mostly strong this season. According to FactSet, 73 percent of S&P 500 companies that have reported have surpassed earnings expectations.


More from CNBC

image beaconimage beaconimage beacon