Stocks Fluctuate as Senate Holdouts to Tax Bill Dwindle

Stocks fluctuated on Friday, Dec. 1, as Senate Republicans made progress in getting their tax bill over the finish line. 

The Dow Jones Industrial Average was flat, the S&P 500 rose slightly, and the Nasdaq dropped 8 points. 

The chances of the bill's passage looked more certain after prominent holdouts Sens. Steve Daines, Ron Johnson and John McCain voiced support for the legislation. Daines and Johnson became a "yes" after Senate leaders agreed to increase the deduction available for pass-through income. The deduction amount was raised to 23% from 17.4%, according to analysis by The Wall Street Journal. 

A day earlier, McCain said he would support the legislation on Thursday. In a statement, McCain said that the bill "though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families." However, a number of economists have criticized the bill's logic -- tax relief for corporations does not necessarily inspire increased reinvestment and higher worker wages. In fact, the New York Times reported that an initiative to deliver corporate tax savings in 2004 was funneled toward share buybacks, instead.

Senate Republicans have delayed further votes on their version of a tax bill until late Friday morning after running into a procedural roadblock. Late Thursday, Nov. 30, a Senate rule-making office turned down a so-called trigger mechanism that would have raised taxes if the bill's revenue goals were missed, Bloomberg reported. Three Republican senators, whose votes are crucial for passage of the bill, had insisted on the trigger.

The bill's passage is not yet certain with a a few holdouts still concerned over how cuts will drive up the deficit -- Republicans can only afford to lose two votes from their own party. The Joint Committee on Taxation said the bill will add $1 trillion to the deficit over a decade, and that economic growth from the tax cut will only offset $407 billion of the $1.5 trillion cost over the next decade.

Markets rocketed to records on Thursday on high hopes Republicans can deliver on their promised corporate tax cuts. The Dow reached a new record for its third day in a row, while the S&P 500 beat a record set on Tuesday, Nov. 28. The bill provides modest tax breaks for the middle class and significant benefits for the wealthy and corporations and will require borrowing some $1.5 trillion to add to the federal deficit.

Senator John McCain.

The Trump White House's former national security adviser Michael Flynn has been charged with giving false information to the FBI, the latest charges to be levied during the Special Counsel's Russia probe. Flynn is expected to enter a plea, though has not yet done so. 

Technology names were wavering on Friday a day after recovering from a mid-week selloff. The sector had plummeted on Wednesday, Nov. 29, and delivered the Nasdaq its worst day in three months. Facebook Inc. (FB)  and Adobe Systems Inc. (ADBE) were lower while Apple Inc. (AAPL)  and Microsoft Corp. (MSFT)  rose slightly. The tech sector has been particularly susceptible to selloffs since the middle of the year following a steep run-up over the past 18 months.

Apple, Microsoft and Facebook are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.

Fiat Chrysler Automobiles (FCAU) reported a decline in unit sales over November, though it was not as steep as analysts anticipated. Sales fell by 3.7% compared to an expected 5.5% drop. Retail sales rose by 2% and fleet sales dropped 25%. By brand, Fiat sales fell 28%, Chrysler increased 14%, Dodge dropped 15%, and Jeep declined 2%. 

Sales in November for Ford Motor Co. (F) were up 6.7% year over year, while the automaker's SUVs recorded their best November sales period in 17 years. General Motors Co. (GM) sales in November fell 2.9%.

Manufacturing activity in the U.S. declined in November, though held in expansion territory for another month, according to the ISM Manufacturing Index. The measure dipped to 58.2 from 58.7 in October. Analysts expected a decline to 58.4. Employment and prices dipped, while new orders and production increased. Manufacturing has remained in expansion territory for 101 straight months. 

A separate reading from Markit Economics also showed a slight softening in manufacturing activity. The PMI Manufacturing Index declined to 53.9 in November from 54.6 in October. Analysts expected the reading to fall at a shallower pace to 54.5. 

Construction spending rose at nearly triple the pace analysts expected in October. The Census Bureau reported a 1.4% jump in spending, well above expectations for an increase of 0.5%. Spending increased 0.3% in September. 

Crude oil prices were higher ahead of an afternoon reading on drilling activity in the U.S. Prices made small gains a day earlier after Organization of Petroleum Exporting Countries and other oil-producing nations agreed to extend a production cut agreement through to the end of 2018. Representatives of oil-producing nations had convened in Vienna to discuss a supply-demand imbalance.

The current agreement has reduced supply by 1.8 million barrels per day since January and supported oil's rise beyond $60 a barrel. The agreement to limit production is currently due to expire in March. An extension was widely expected.

West Texas Intermediate crude oil was up 0.9% to $57.89 a barrel on Thursday.

CVS Health Corp. (CVS) is nearing an agreement to acquire health insurer Aetna Inc. (AET) for more than $66 billion in cash and stock. The acquisition could be announced as soon as Monday, Dec. 4, The Wall Street Journal reported. The latest price tag -- down from the Journal's previously reported $70 billion -- values Aetna at about $200 to $205 a share, and consist mainly of cash. Aetna shares closed Thursday at $180.18 with a market cap of $58.56 billion.

Blue Apron Holdings Inc. (APRN) was higher on Friday after naming its Chief Financial Officer Brad Dickerson as its new CEO, freeing up current CEO Matt Salzberg to step into the executive chairman role. The meal delivery kit service is now looking for a CFO. 

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