Wall Street slips as tax uncertainty outweighs easing inflation worries | Money


A commuter walks on Wall Street across from the New York Stock Exchange January 10, 2019. — Reuters pic
A commuter walks on Wall Street across from the New York Stock Exchange January 10, 2019. — Reuters pic

NEW YORK, Sept 14 — Wall Street indexes fell today on uncertainty over a possible increase in corporate taxes, even though slowing growth in monthly consumer prices eased some fears of the Federal Reserve reducing stimulus early.

Sectors including energy and financials pulled back from their strong gain in the previous session and were the worst performers in early trading.

Major technology stocks continued to lag their broader peers and US-listed Chinese firms dropped further as investors remained wary of regulatory shocks from Beijing.

Focus is now on the potential passage of US President Joe Biden’s US$3.5 trillion (RM14.5 trillion) budget package, which is expected to include a proposed corporate tax rate hike to 26.5 per cent from 21 per cent.

A possible hike in corporate taxes is yet another uncertainty, along with recent concerns over slowing economic growth due to rising Covid-19 cases.

Meanwhile, data from the Labour Department showed underlying consumer prices rose at their slowest pace in six months in August, suggesting that inflation had probably peaked. July’s reading had also shown a slight slowdown in price increase.

But consumer price inflation is still at high levels. Along with strong producer prices last week and some discord among Fed members over when to begin tapering, it meant investors were still uncertain over the policy shift.

“It doesn’t force the Fed’s hand, so there’s a possibility that the Fed could drag its feet and when they do announce tapering, it may be smaller than what the Street may be looking for that time,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

“I’m not thinking that they do any tapering in September, but I’m not sure where their heads are all at. If it’s up to (Fed Chair) Powell, he’ll wait till November. But other Fed members seem to be on different pages.”

At 10.12am ET, the Dow Jones Industrial Average fell 110.28 points, or 0.32 per cent , to 34,759.35, the S&P 500 lost 9.54 points, or 0.21  per cent, to 4,459.19 and the Nasdaq Composite lost 4.14 points, or 0.03  per cent, to 15,101.35.

Market participants now expect a substantial correction in stock markets by the end of the year, with some investors turning bearish on a global economic recovery.

Among individual stocks, CureVac fell more than 3 per cent after the German biotechnology firm canceled manufacturing deals for its experimental Covid-19 vaccine with two prospective partners, after rivals with approved shots boosted production.

Declining issues outnumbered advancers by a 1.4-to-1 ratio on the NYSE and by about a 1.5-to-1 ratio on the Nasdaq.

The S&P 500 posted 2 new 52-week highs and one new low while the Nasdaq recorded 44 new highs and 42 new lows. — Reuters



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