Summary

The major domestic equity indexes closed out the trading day in the red on Thursday, weighed down by losses in Microsoft and other technology issues. The key reason was a possible delay in expected corporate tax cuts as the legislation in the Senate differs dramatically from that of the House.

The S&P 500 index is up about 21 percent, fueled in no small part by promises from Washington to cut corporate taxes in conjunction with a number of other business-friendly measures.

The Senate proposal delays a corporate tax rate cut to 20 percent by a year and provides small-business owners with a deduction rather than a special business rate, said the aides.

Earlier on Thursday, uncertainty about the future of corporate tax rates pushed the S&P 500 down as much one percent, underscoring how much Wall Street is counting on a tax reduction. However, the selloff was brief, and stocks quickly recovered much of the decline.

The S&P 500 is trading at 18 times expected earnings, expensive compared with its 10-year average of 14.3, according to Thomson Reuters Datastream. Cutting corporate taxes would boost earnings and make stocks relatively less expensive.

One of the sectors most worried over a possible delay in tax reform is technology. The Philadelphia Semiconductor index has been a top performer in 2017. Meanwhile, six of the 11 major S&P 500 sectors fell, with industrials down 1.28 percent and the technology off 0.85 percent. Apple, Microsoft, Alphabet, Oracle and Facebook were among the stocks weighing most on the S&P 500.

Technology has been the best-performing S&P 500 sector this year, with a 37 percent rise. The sector’s stretched valuations make it vulnerable to selling as investors worry that promised tax reductions might not emerge.

Roku ended the day up 55 percent after the video streaming device maker’s quarterly results and guidance exceeded expectations.

Macy’s rose 10.98 percent after the department store operator’s profit came in above expectations.

In afterhours trading, Nordstrom fell one percent after that retailer reported quarterly sales short of analysts’ expectations.

Disney ended the trading day down 2.0 percent in afterhours trading after the release of its quarterly report, while Nvidia ended the trading day with a gain of nearly 2.0 percent, following its earnings announcement.

During the day’s trading session, Dish Network rose 3.22 percent after the satellite and internet TV provider added subscribers in the United States in the third quarter and reduced the rate at which it lost existing customers.

Approximately 7.4 billion shares changed hands on the major domestic equity exchanges, a number that was above the 6.6 billion share daily average over the past 20 trading sessions.

Unemployment Claims Higher Than Expected

The number of Americans filing for unemployment benefits rose more than expected last week, suggesting that claims processing disrupted by recent hurricanes has begun to improve.

According to Thursday morning’s report on Initial claims for state unemployment benefits by the Labor Department, claims increased by 10,000 claims to seasonally adjusted 239,000 claims for the week ended November 4.

Claims had fallen to 229,000 claims in the prior week, near a 44-1/2-year low, and remain well below the 300,000 level generally regarded as signaling a healthy labor market.

Claims have declined from an almost three-year high of 298,000 hit at the start of September in the aftermath of hurricanes that ravaged parts of Texas, Florida, Puerto Rico and the Virgin Islands.

The Labor Department noted that it is now processing backlogged claims in Puerto Rico though its operations in the Virgin Islands remain severely disrupted.

Last week marked the 139th straight week that claims remained below the 300,000-claim threshold. That is the longest such stretch since 1970, when the labor market was smaller.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell by 1,250 claims to 231,250 claims last week, making it the lowest level since March 31, 1973.

It appears that ongoing job growth is continuing in an economy many regard as near full employment, with the jobless rate at a 17-year low of 4.1 percent.

The so-called continuing claims rose by 17,000 to 1.90 million claims. The four-week moving average of continuing claims fell by 750 claims, to 1.90 million, the lowest level since Jan. 12, 1974, suggesting a continued decline in labor market slack.