Credit: Shutterstock photoBenchmarks finished in the red on Tuesday after optimism over the passage of the Republican tax Bill was outweighed by its impact on future monetary policy stimulus. Further, investors widely expected the much-awaited tax cut bill, which in turn resulted in a stock sell-off. However, the House failed to comply with Senate rules on Tuesday, following which the House will re-vote for the tax Bill again on Wednesday.
The Dow Jones Industrial Average (DJIA) decreased 0.2%, to close at 24,754.75. The S&P 500 Index (INX) fell 0.3% to close at 2,681.47. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,963.85, losing 0.4%. A total of 6.6 billion shares were traded on Tuesday, lower than the last 20-session average of 6.8 billion shares. Decliners outnumbered advancers on the NYSE by a 1.81-to-1 ratio. On Nasdaq, a 1.82-to-1 ratio favored declining issues. The CBOE VIX increased 5.3% to close at 10.03.
Focus on Republican Tax Bill
During the trading day, the House of Representatives passed the Republican tax overhaul Bill. Optimism of a lower corporate tax rates boosted sentiment for the last few sessions. However, markets witnessed a slight pullback on Tuesday after days of rally, which in turn weighed on all the three key U.S. indexes.
Although, the House passed the tax Bill, it violated Senate rules. The three provisions which were included in the Bill did not fulfill the Byrd Rule. The provisions include criteria used to determine whether private university grants were subject to excise taxes, allowing families to utilize 529 plans to bear home-schooling costs and the name of the Bill.
The Senate is expected to vote for the bill after the market close excluding these provisions, following which the House will re-cast vote to pass the Bill. Additionally, two more Republican Senators Susan Collins and Mike Lee decided to vote in favor of the GOP tax bill.
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 1.9%, becoming the worst performer among the S&P 500 sector. Some of its key holdings including Welltower Inc. HCN and Ventas, Inc. VTR decreased 4.3% and 4%, respectively.
Additionally, the Utilities Select Sector SPDR (XLU) fell 1.8%, becoming the second biggest declining sector among the S&P 500. Some of its key components including Exelon Corporation EXC and PPL Corporation PPL decreased 2.1% and 4.6%, respectively. While, Exelon has a Zacks Rank #3 (Hold), PPL possess a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
New Residential Construction Remains Upbeat
Per the Census Bureau and Housing and Urban Development Department, new residential construction also came in favorable in June. Housing starts rose to 1.297 million in November from the upwardly revised 1.256 million in October, well above analysts' estimate of 1,251 million.
Moreover, a key indicator of future housing activity prospects building permits increased by 3.4% year over year to settle at 1.298 million in November. Additionally, it was also higher than the estimated level of 1,278 million. New residential construction reached its best level in more than a decade.
Stocks That Made Headlines
FedEx Beats on Q2 Earnings & Revenues, Stock Gains
FedEx CorporationFDX reported better-than-expected results in the second quarter of fiscal 2018 driven by increased package volumes during the peak holiday season. ( Read More )
Campbell Soup Fortifies Snacks Division, Buys Snyder's-Lance
Campbell Soup CompanyCPB has agreed to buy the leading snacks maker - Snyder's-Lance, Inc. LNCE - in an all-cash deal worth nearly $4.87 billion or $50 per share. ( Read More )
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Exelon Corporation (EXC): Free Stock Analysis Report
PPL Corporation (PPL): Free Stock Analysis Report
Campbell Soup Company (CPB): Free Stock Analysis Report
Snyder's-Lance, Inc. (LNCE): Free Stock Analysis Report
FedEx Corporation (FDX): Free Stock Analysis Report
Ventas, Inc. (VTR): Free Stock Analysis Report
Welltower Inc. (HCN): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
