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 US House of Representatives gave final approval to a sweeping tax Bill, which will be the largest overhaul of the US 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 per cent from 35 per cent from January 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 per cent 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 per cent, to 24,726.65, the S&P 500 lost 2.22 points, or 0.08 per cent, to 2,679.25 and the Nasdaq Composite dropped 2.89 points, or 0.04 per cent, to 6,960.96. Four of the 11 major S&P sectors ended higher, led by a 1.4 per cent gain in energy. Energy stocks were fueled as oil prices rose about 1 per cent, supported by a larger-than-expected drop in US inventories.

Telecoms saw a 0.6-per cent rise. The sector is considered by some analysts to be the biggest beneficiary of lower taxes. AT&T gained 1.3 per cent. The Dow Jones Transport Index jumped 0.9 per cent to a record high close, helped by a surge in FedEx. The company's shares were up 3.5 per cent 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 per cent on the S&P 500. Chipmaker Micron was up 4.0 per cent after strong results and forecast. The consumer staples index fell 0.4 per cent, weighed by a 2.5-per cent 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 US 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 favoured advancers. Volume so far on US exchanges was 6.17 billion shares, compared to the 6.84 billion average for the full session over the last 20 trading days.

Related Topics