US stocks skidded Thursday after Senate Republicans surprised Wall Street by proposing a delay in cutting corporate taxes. Industrial and technology companies fell the most, but stocks regained some of their losses before the closing bell.
Senate Republicans introduced a tax bill a week after their House counterparts did the same. While both bills would ultimately reduce the corporate tax rate to 20 percent from 35 percent, the Senate legislation doesn’t do that until 2019. However, the worst results Thursday came not from the smaller, US-focused companies that might benefit the most from a domestic tax cut, but from larger multi-national companies.
Industrial companies had their worst day in almost three months. Weak reports from aircraft parts maker TransDigm and medical waste processor Stericycle were partly to blame, while a weak forecast from Johnson Controls also hurt the sector. Media companies traded higher after a solid report from Twenty-First Century Fox.
At midday, stocks were on track for their biggest loss in months, as the Dow Jones industrial average fell as much as 253 points, but they made up some of that ground in the afternoon.
The stock sectors that fell include some of the best-performing stocks this year, and investors reacted to the potentially delayed tax cut by taking some profits.
‘‘Most investors knew there was uncertainty about the specific provisions, but thought that the House and the Senate would at least agree there would be some kind of cut in corporate tax rates in 2018,’’ said Kate Warne, an investment strategist at Edward Jones.
The Standard & Poor’s 500 index dropped 0.4 percent, to 2,584.62. The Dow Jones industrial average fell 0.4 percent, to 23,461.94. The Nasdaq Composite slid 0.6 percent, to 6,750.05. Each had closed at a record high on Wednesday. The Russell 2000 index of smaller-company stocks fell 0.5 percent, to 1,475.02, its lowest level since late September.
Google’s parent company, Alphabet, fell 1 percent, while payment company eBay lost 3.6 percent.
Warne added that something else worried investors Thursday: reports over the last two days that the Justice Department has objections to AT&T’s purchase of Time Warner Cable. President Trump’s administration has emphasized cutting regulations, and she said investors are surprised the government is taking issue with the $85 billion deal — and that the Justice Department and the companies are arguing about it in public.
After a steep loss Wednesday, Time Warner Cable fell a further 1.6 percent, and AT&T rose 1.7 percent.
Twenty-First Century Fox posted a bigger profit and more revenue than investors expected. Analysts said its cable networks did well, and it didn’t lose subscribers the way some of its competitors have done recently. Its stock added 2.2 percent. Cable provider Comcast gained 1 percent. Walt Disney, which was reported this week to have spoken to Fox about buying most of its entertainment assets, added 1.5 percent.
Macy’s surged 11 percent after its third-quarter profit was greater than expected. Dillard’s jumped 12.2 percent following its report. Macy’s and Kohl’s have both fallen sharply this year as they deal with falling sales and growing competition from online retailers.
Bond prices were little changed. The yield on the 2-year Treasury note fell to 1.64 percent from 1.65 percent. The yield on the 10-year note remained at 2.33 percent.