Stock Market News For Dec 21, 2017

Benchmarks ended in negative territory on Wednesday as investors remained indifferent even as Congress passed the much-awaited Republican tax Bill. During the day, all the three key U.S. indexes reached record high levels initially, but finished lower following a pullback. Markets have already traded higher in the last few sessions on optimism over the passage of the tax cut Bill and witnessed a sell-off after both the Houses actually passed the Bill on Wednesday.

The Dow Jones Industrial Average (DJIA) decreased 0.1%, to close at 24,726.65. The S&P 500 Index (INX) fell 0.1% to close at 2,679.25. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,960.96, losing 2.39 points. A total of 6.17 billion shares were traded on Wednesday, lower than the last 20-session average of 6.84 billion shares. However, advancers outnumbered decliners on the NYSE by a 1.01-to-1 ratio. On Nasdaq, a 1.01-to-1 ratio favored advancing issues. The CBOE VIX decreased 4.4% to close at 9.59.

Congress Finally Pass Republican Tax Bill

On Tuesday, the House of Representatives passed the Republican tax overhaul Bill. Although, the House passed the tax Bill, it violated Senate rules during this process. The three provisions which were included in the Bill did not fulfill the Byrd Rule. These include criteria used to determine whether private university grants are subject to excise taxes, allowing families to utilize 529 plans to bear home-schooling costs and the name of the Bill itself.

The Senate Republicans passed the tax overhaul Bill early Wednesday, excluding the provisions. The Senate voted 51-48 in favor of the Bill, with majority of the Republicans present in the Senate supporting the new tax code. The Bill permanently slashes corporate tax rates from 35% to 21%. Further, companies will be allowed to pay a 5% tax on reinvested earnings and 10% tax on deferred cash earnings. After the Senate passed the tax Bill, the House of Representatives re-voted 224-201 in favor of the Bill, complying with the Senate rules.

Optimism regarding lower corporate tax rates has already boosted sentiment for the last few sessions. However, markets witnessed a slight pullback on Wednesday as investors had already priced in the impact of the legislation, which in turn weighed on all the three key U.S. indexes.

In the of S&P 500, out of its 10 key sectors, seven of them declined yesterday with both real estate and utilities sectors being key decliners. The Real Estate Select Sector SPDR (XLRE) fell 1.1%, becoming the worst performer among the S&P 500 sector. Some of its key holdings including Simon Property Group, Inc. (NYSE:SPG) and Public Storage (NYSE:PSA) decreased 2.6% and 1.5%, respectively.

Additionally, the Utilities Select Sector SPDR (XLU) fell 0.8%, becoming the second biggest declining sector among the S&P 500. Some of its key components including Exelon Corporation (NYSE:EXC) and Xcel Energy Inc. (NYSE:XEL) decreased 1.5% and 1.7%, respectively. While, Exelon has a Zacks Rank #3 (Hold), Xcel Energy possess a Zacks Rank #4 (Sell). You can see Zacks Investment Research

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Written By: Zacks Investment Research