Wall Street indexes fell on Tuesday on uncertainty over a potential increase in corporate taxes, even as a slow rise in monthly consumer prices eased some fears of the Federal Reserve easing stimulus too early.
Sectors including energy and financials retreated from their strong gains in the previous session and were the worst performers in early trade.
Major technology stocks continued to lag behind their broader peers and US-listed Chinese firms fell further as investors wary of regulatory shocks from Beijing.
The focus is now on the possible passage of US President Joe Biden’s $3.5 trillion budget package, which is expected to increase the proposed corporate tax rate from 21% to 26.5%.
A possible increase in corporate taxes is yet another uncertainty, along with recent concerns of slowing economic growth due to rising COVID-19 cases.
Meanwhile, Labor Department data showed underlying consumer prices rose at their slowest pace in six months in August, suggesting inflation was probably peaking. There was also a slight decline in prices in the July readings.
But consumer price inflation is still high. Last week, along with strong producer prices and some controversy among Fed members over when to start tapering, meant investors were still unsure about the policy change.
Senior Portfolio Robert Pavlik said, “It doesn’t force the Fed’s hand, so there is a possibility that the Fed could drag its feet and when they announce the tapering, it may be smaller than it was at the time.” ” Manager at Dakota Wealth in Fairfield, Connecticut.
“I’m not thinking they do any tapering off in September, but I’m not sure where their heads are. If it’s up to (Fed Chair) Powell, he’ll wait until November. But other Fed members seem to think so.” is on different pages.”
At 11:05 a.m., the Dow Jones Industrial Average fell 208.18 points, or 0.60%, to 34,661.45, the S&P 500 fell 13.72 points, or 0.31%, to 4,455.01, and the Nasdaq Composite fell 16.76 points, or 0.11%, to 15,088.82. .
Market participants now expect a substantial recovery in the stock markets by the end of the year, with some investors turning bearish on the global economic recovery.
Among individual stocks, CureVac fell more than 3% after the German biotechnology firm canceled manufacturing deals with two potential partners for its experimental COVID-19 vaccine, after boosting production of rivals with approved shots. .
Issues decline in the number of advances from a 1.4-to-1 ratio on the NYSE and about 1.5-to-1 on the Nasdaq.
The S&P 500 posted two new 52-week highs and one new low, while the Nasdaq recorded 44 new highs and 42 new lows.
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