U.S. equities fell from record highs set earlier on Monday as a rally in retail stocks faded.
The Dow Jones industrial average traded 28 points higher, but remained below 23,638.92, a record high set earlier in the session.
The S&P 500 traded around the flatline, as a 6.6 percent pullback in Western Digital offset a 4.8 percent gain in L Brands. The Nasdaq composite, meanwhile, declined 0.1 percent. Both indexes had also reached record highs prior to trading lower.
The major indexes had received a boost from gains in retail which fizzled out in late-morning trade. The SPDR S&P Retail exchange-traded fund (XRT) traded 0.3 percent higher, after rising as much as 1.5 percent. Macy’s and Kohl’s also traded off their session highs.Gap shares, meanwhile, held on to its gains, trading 1.8 percent higher after Wall Street analysts dubbed the company the “weekend winner.”
E-commerce giant Amazon remained 1.1 percent higher as data from Adobe Analytics showed online Black Friday sales rose nearly 17 percent from last year. The stock, however, traded below its record high.
Investors cheered retail stocks earlier on Monday as they bet on strong holiday-season sales following Black Friday.
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“That space seems to be a ‘show me’ story,” said Art Hogan, chief market strategist at Wunderlich Securities. “It only takes a bit of good news for these companies to go higher.” He noted, however, that Wall Street remained cautious ahead of a key vote set for later in the week.
The Senate is expected to vote on a bill aimed at reforming the U.S. tax code on Thursday. Investors have been eagerly awaiting tax reform since last year’s election, but doubts about whether the Republican-led Congress would be able to achieve this before year-end have lingered.
If the Senate bill passed, then a joint bill with the House would have to be created. The House passed a bill on Nov. 16 to cut taxes on businesses and individuals, but it differs from the Senate bill in some key areas.
The most significant difference between the chambers’ plans is the treatment of state and local tax deductions. The Senate plan would eliminate those deductions entirely. The measure could alienate some House Republicans who voted for the chamber’s bill that would allow up to $10,000 in property tax deductions.
However, L. Thomas Block, Washington policy strategist at Fundstrat Global Advisors, said he expects a joint tax bill to be passed by Christmas.
“House and Senate Republicans can’t face the voters in 2018 without passing a tax,” he said.
Source: cnbc.com