Wall Street tramples on pending tax cuts




by Lewis Krauskopf

NEW YORK (Reuters) – The New York stock Exchange ended Friday with a session of decline in a week volatile, marked by the uncertainties surrounding the proposed tax reform in the United States and taken profits at the end of a season of results with the overall convinced investors of the relevance of the valuations are currently high.

The Dow Jones has lost 100,12 points (-0,43%), 23.358,24. The Standard & Poor’s 500, wider and main reference of the investors, has sold 6,79 points, or 0.26 per cent, to 2.578,85. The Nasdaq Composite, technology-intensive, for its part, finished down 10.5 points (-0,15%) to 6.782,79.

On the week, the Dow has dropped 0.27% and the S&P-500 0,13%, a second consecutive week of decline for both indexes, while the Nasdaq gained 0.47 per cent.

“We have seen an increase in correct actions recently and this are only a few days of spa”, think Massud Ghaussy (Nasdaq Advisory Services).

Wall Street has stolen records in terms of records since the beginning of the year, encouraged in particular by the promises of tax cuts massive the new american president Donald Trump.

The republicans in the majority in both houses of Congress, seized of the subject, but representatives and senators are moving again for the moment two different proposals for tax reform. If the House of representatives adopted Thursday, his own text, the Senate has not yet voted on his own while the republicans will have a majority of shorter and apparently less united on the subject.

Economists polled by Reuters do not believe in a large tax reform by the end of the year in the United States, and they doubt that it really stimulates the economy.

“I think that there is the fear that (the republicans) are not able to gather enough support to be able to file on the office of the president, something really substantial to enact,” said Jake Dollarhide, ceo of Longbow Asset Management.

“The week began with a lot of optimism about tax reform and I think we have a bit of hangover at the end of the week,” he adds.


The Dow Jones has also suffered Friday’s decline of 2.16% of Wal-Mart (NYSE:WMT) on profit taking following the increases of more than 10% of the title after the quarterly results published by the american giant of the distribution.

Foot Locker flew to 28,16%, by far the largest increase in the S&P-500, whereas it had previously fallen approximately 55% since the beginning of the year. The distributor of clothing and sports shoes has delighted investors with its quarterly results better than expected and the control of its stocks, while not precluding doing slightly better than our forecasts on the year as a whole.

The same causes, and almost the same effects for the group of ready-to-wear Gap, which has won 6,99% after its quarterly results better than expected and raising its annual forecast.

The group of tv and cinema Twenty-First Century Fox (NASDAQ:FOX) took advantage of the rumors circulating on the lusts of some of its assets will not give rise to gain 6,24%. After Disney (-0,15%), cable operator Comcast (NASDAQ:CMCSA) (-2,46%) and the telecom operator Verizon (NYSE:VZ) (+1,45%) might be interested in some material assets of Fox, reported sources on Thursday.

The hustle and bustle around the group of Rupert Murdoch has reached Viacom (+10,38%), which seems to be also perceived as a potential target in this sector.

About 6.3 billion shares were traded during the session on different u.s. markets, which is below the average of 6.8 billion over the 20 previous sessions.

On the bond market, the probability judged to be high of a new rate hike from the federal Reserve in December continues to contribute to the flattening of the yield curve in the United States.

The yield on two-year borrowings of the Treasury reached a peak of nine years for an eighth consecutive day to 1.73%, while its equivalent to 10 years fell to 2.35%. As a result, the spread between these two yields has never been so low since November 2007.

The dollar, for its part, seems to suffer from the uncertainties on the tax reform and its potential impact on u.s. growth. The greenback gave up 0.2% against the euro, climbed back near 1.18 dollar, and 0.28% against a basket of currencies of reference.

The euro has taken over 1% against the us dollar on the week, its strongest weekly advance since early September.

The price of oil rose more than 2%, which did not prevent them to suffer a decline in weekly after five consecutive weeks of increase.

(With Sruthi Shankar in Bangalore; Bertrand Boucey for the French service)

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