Stocks were falling on Thursday, Nov. 9, in a retreat from records ahead of the release of the Senate GOP's tax cut plans.
The Dow Jones Industrial Average was down 0.35%, the S&P 500 fell 0.33% and the Nasdaq slid 0.46%.
Senate Republicans were set to unveil their tax reform legislation on Thursday with billions in tax cuts for people and corporations, repeal of the federal deduction for state and local taxes, and a likely compression of the personal income tax brackets to four from seven.
Senate Majority Leader Mitch McConnell said his chamber aims to debate the bill next week, while the House could pass its version around the same time. President Donald Trump's White House has pushed for tax cuts to pass by the end of the year. If that happens, it will be the first piece of major legislation since he assumed office in January.
The tax plan from the House, meanwhile, is nearing approval by the tax-writing committee after last-minute changes by Ways and Means Committee Chair Rep. Kevin Brady.
However, the House's Tax Cut and Jobs Act would increase the deficit by a massive amount, debt Trump and Republicans had pledged to reduce when they were back in power. The House's plan as written would raise the deficit by around $1.7 trillion over a decade, the Congressional Budget Office said on Wednesday, Nov. 8. That surpasses the $1.5 trillion threshold needed so the Senate can vote along party lines, according to Senate rules. Any more than that and the bill would require 60 votes to pass, meaning Republicans would have to court votes across the aisle.
Even with stocks sharply lower on Thursday, Kevin Miller, CEO and portfolio manager at E-Valuator Funds, does not expect a prolonged market downturn should the GOP's tax plans fail to pass.
"I don't think we would see a significant selloff if it didn't pass, but it might be a pullback," Miller told TheStreet in a call. "The earnings reports are coming in very strong. So I think it would just slow down the potential upside as opposed to creating a big drawback."
Trump capped his visit to China on Thursday with a litany of new commercial contracts for some of America's biggest companies even as he continued to criticize trade relations between the world's two biggest economies. Around $250 billion in new and existing deals between U.S. and Chinese companies were touted by the president and his team as they departed from the third leg of Trump's 11-day Asia tour and celebrated the anniversary of his shock election victory last November.
Boeing Co. (BA) - Get Report , General Electric Co. (GE) - Get Report , Qualcomm Inc. (QCOM) - Get Report , Goldman Sachs Group Inc. (GS) - Get Report and Ford Motor Co. (F) - Get Report were just some of the names on the list of deals and contracts linked to the Trump visit and the broader ambitions of an economic policy he began trying to coordinate with China President Xi Jinping earlier this year.
Boeing was perhaps the biggest recipient of what China's Commerce Minister Zhong Shan called a "miracle" of trade deals, agreeing to terms on the sale of 300 jets with a list value of around $37 billion to China Aviation Suppliers Holding Co. Some of the orders, however, could have been blended into past agreements, analysts said, making it difficult to judge how much the announcement will change Boeing's order book.
Tech stocks were the worst performers on Thursday and a major drag on the Nasdaq. The sector's largest companies including Alphabet Inc. (GOOGL) - Get Report , Microsoft Corp. (MSFT) - Get Report , Facebook Inc. (FB) - Get Report , Alibaba Group Holding Ltd. (BABA) - Get Report and Intel Corp. (INTC) - Get Report were all lower. The Technology Select Sector SPDR ETF (XLK) - Get Report fell 0.9%.
The sector has been responsible for a large chunk of the gains since Trump's election a year earlier. However, that has also made tech names susceptible to sharp selloffs since their first major slump in June.
In earnings news Thursday, Square Inc. (SQ) - Get Report reported better-than-expected adjusted earnings over its third quarter and increased its full-year revenue and profit estimates. The payments processor reported adjusted profit of 7 cents a share, one cents higher than a year earlier and two cents more than expected. Adjusted revenue of $257.2 million exceeded analysts' targets of $245.2 million.
For its full year, Square projected adjusted earnings of 24 cents to 25 cents a share, higher than previous guidance of 21 cents to 23 cents.
Kohl's Corp. (KSS) - Get Report reported revenue and same-store sales growth, but earnings per share disappointed. Earnings of 70 cents a share fell 12.5% from a year earlier and fell short of estimates by 2 cents. Revenue inched 0.1% higher to $4.33 billion, matching analysts' estimates. Same-store sales also grew 0.1%, far better than a 1.7% drop a year earlier.
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Macy's Inc. (M) - Get Report reported third-quarter adjusted earnings of 23 cents a share, beating forecasts that called for 19 cents. Revenue of $5.28 billion was slightly below estimates of $5.31 billion. Same-store sales fell 4%, Macy's 11th consecutive quarter of same-store sales declines.
Twenty-First Century Fox Inc. (FOXA) - Get Report reported fiscal first-quarter revenue that beat analysts' expectations, while earnings of 49 cents a share were in-line with Wall Street forecasts. Fox's better-than-expected results came as investors continued to wonder what to make of a CNBC report earlier this week that said Fox executives recently spoke with their counterparts at Walt Disney Co. (DIS) - Get Report about selling their film and TV production studio along with their Star India networks and 39% stake in Sky PLC, the enormous European satellite-TV operator.
The two parties currently aren't holding discussions, according to reports. CEO James Murdoch said he wouldn't respond directly to deal speculation but did say that Fox has "a great set of brands and businesses that we really like."
Roku Inc. (ROKU) - Get Report rocketed higher, up 45%, after a better-than-expected quarter, its first earnings report since going public. The home-streaming service reported a 40% rise in revenue to $124.8 million, exceeding estimates of $110 million. A loss of 10 cents a share was a fraction of an expected loss of 28 cents a share. Founder and CEO Anthony Wood called the quarter a "milestone" in the company's young history.
Initial jobless claims rose in the past week, though a monthly average fell to its lowest level since March 1973. The number of new claims for unemployment benefits increased by 10,000 to 239,000 in the week ended November 4, according to the Labor Department. Analysts expected a reading of 231,000. The less volatile four-week average dipped by 1,250 to 231,250.
Updated from 10:09 a.m. ET, Nov. 9.
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