Bonds Tumble, Stocks Mixed as Tax Bill Progresses: Markets Wrap
New York (Dec 20) U.S. stocks fluctuated near record highs while Treasury yields climbed to a nine-month peak as the Republican tax overhaul moved closer to passage.
The S&P 500 Index gave up early gains Wednesday morning, pulled down in part by tobacco and real estate shares. Core European bond yields followed Treasury rates higher, with European Central Bank asset purchases for the year ending Thursday.
The U.S. Senate’s approval of the tax-cut legislation in a 51-48 party line vote brings President Donald Trump to the brink of his first major legislative victory. The measure is set to go to the House of Representatives for a final vote, and an event is scheduled at the White House on Wednesday afternoon. The bill itself will be signed at a later date.
“The tax reform passing, you’d expect the market to celebrate that,” Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, said by phone. “But in reality a lot of this has already been part of the drama over the last year or so in anticipation of this moment. The market has gotten what it has already been discounting in.”
Tech shares led the Stoxx Europe 600 Index to its biggest decline in almost three weeks, with Spanish equities underperforming before Thursday’s Catalan poll. Miners gained as the Bloomberg Commodity Index advanced for a sixth day. The euro climbed against the dollar, as did the British pound. The yen declined.
Meanwhile, oil held onto gains after a report of a drop in U.S. crude stockpiles. Gold edged higher and industrial metals rose.
Earlier, Japan’s Topix index closed at its highest level since November 1991, while stocks in Hong Kong and China declined.
Terminal users can read more in our live markets blog.
Among the key events investors will be watching this week:
•The U.S. and U.K. publish updated estimates of third-quarter GDP.
•The Bank of Japan meets on Thursday to set monetary policy.
•Catalonia votes in an election Thursday that will pose a test for the Spanish region’s secession movement.
bLOOMBERG
