U.S. Stocks, Dollar Fall as Tax Debate Heats Up

Gold Silver Reports – U.S. equities slumped, with small caps leading losses, and the dollar erased a gain as concern mounted that the Republican tax overhaul package may struggle to pass the Senate.

All major U.S. equity gauges were lower. The S&P 500 Index dropped in afternoon trading after Republican Senator Marco Rubio’s spokeswoman said he told Senate leaders he’ll oppose tax legislation unless they agree to a larger child tax credit. Republicans can only afford to lose two votes and still guarantee passage.

“I think it’s primarily the tax headlines,” said Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management. “We’re getting right down to the wire here, and I think there’s some added pressure, with Moore losing the election, to make sure that this doesn’t get derailed and not get done by the end of the year.”

The Russell 2000 Index, whose domestically focused members stand to benefit most from cuts, lost roughly 1 percent. The tech-heavy Nasdaq Composite Index retreated from an earlier advance after the U.S. Federal Communications Commission’s decision to sweep aside internet neutrality rules.

The dollar tumbled despite data showing U.S. retail sales topped estimates last month. Yields on 10-year Treasuries rose slightly. The retail figures signaled a broad strengthening of consumer demand as the holiday shopping season got under way, bolstering optimism in the world’s largest economy.

The Fed on Wednesday said the labor market was tightening but it still didn’t see inflation accelerating. The euro retreated with the ECB remaining cautious about the prospects of reaching its inflation goals, even as the central bank reiterated its pledge to keep stimulus in place.

The tax debate appeared to overshadow a raft of central bank decisions affirming optimism that economic growth is picking up around the world. Concern is mounting after Rubio’s statement put him in the company of a handful of Republicans who’ve said they’re undecided.

Meanwhile, in comments after Europe’s central bank kept rates steady, ECB President Mario Draghi stopped short of declaring that the lender will meet its inflation goal in 2020, signaling that the euro-area economy isn’t yet strong enough to warrant cutting monetary stimulus.

Read More: Fed Spells Relief for Gold Traders Worried Over Rate-Hike Pace

“For the ECB, the big question is what is their next steps once tapering is done?” said Alex Dryden, a London-based market strategist at JPMorgan Asset Management. “The most important central bank to be watching in 2018 is the ECB. They are the ones with some of the biggest question marks over their heads, there’s a lot of clarity that is needed on what will be happening there.”

Elsewhere, the Mexican peso strengthened versus the dollar as the country’s central bank raised its benchmark rate. The pound slipped following the Bank of England’s decision to keep interest rates unchanged. Turkey’s lira fell after its central bank raised a key rate less than investors expected. Gold slid and crude rose, reversing Wednesday’s declines to trade above $57 a barrel.

European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement negotiators meet again.

And these are the main moves in markets:

Stocks

The S&P 500 finished down 0.4 percent, while the Nasdaq Composite slid 0.3 percent after rising as much as 0.4 percent earlier in the session.

  • The Stoxx Europe 600 Index dropped 0.5 percent.
  • The MSCI All-Country World Index dipped 0.2 percent for its first decline in a week.
  • The U.K.’s FTSE 100 Index fell 0.7 percent, the largest retreat in two weeks.
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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

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