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Saturday 25

November, 2017 1:08 PM



Doubts about tax cuts weigh on Wall Street

Doubts about tax cuts weigh on Wall Street

US stocks ended the week lower for the first time in nine weeks, amid worries about the future of promised corporate tax cuts.

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By AAP 11.11.2017 08:59 AM

Wall Street has closed marginally lower on Friday, as investors worried about the future of promised corporate tax cuts following duelling plans unveiled by Republican lawmakers.

The S&P 500 and the Dow Jones Industrial Average ended the week lower for the first time in nine weeks.

US Senate Republicans released a tax plan on Thursday that differed from a version put forth by the House of Representatives on several key fronts, including putting off corporate tax cuts for a year.

Expectations of lower taxes, one of President Donald Trump's key campaign promises, have helped drive the S&P 500 up 20 per cent since the 2016 presidential election.

Failure to cut corporate taxes would increase concerns about Trump's ability to pass legislation and could shake markets that have been banking on lower tax rates to boost company earnings.

The S&P 500 on Friday stood at 18.1 times expected earnings, the highest since 2004, according to Thomson Reuters Datastream.

Arrow Funds Director of Research John Serrapere put the chances of successfully passing meaningful tax cuts at 50 per cent, and he warned that failing could trigger a correction of as much as 15 per cent in stocks.

"There's not a lot of confidence. I'm not pessimistic, but there are a lot of pieces that need to be put together," Serrapere said.

The Dow fell 0.17 per cent to end at 23,422.21, while the S&P 500 slipped 0.09 per cent to 2,582.3.

The Nasdaq Composite edged up 0.01 per cent to 6,750.94.

For the week, the Dow lost 0.5 per cent and the S&P 500 slipped 0.21 per cent. The Nasdaq gave up 0.2 per cent for the week, snapping six weeks of weekly gains.

Intel fell 1.55 per cent and Apple lost 0.33 per cent, both accounting more than any other companies for the S&P 500's decline.

About 6.4 billion shares changed hands on US exchanges, below the 6.6 billion daily average over the last 20 sessions.

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