Doubts about tax cuts weigh on Wall Street

By Noel Randewich

(Reuters) - Wall Street surrendered ground on Friday, with losses seen in Intel and Microsoft as investors worried about the future of promised corporate tax cuts following duelling plans unveiled by Republican lawmakers.

U.S. Senate Republicans released a tax plan on Thursday that differed from a version put forth by the House of Representatives on several key fronts, including putting off corporate tax cuts for a year.

Expectations of lower taxes, one of President Donald Trump's key campaign promises, have helped drive up the S&P 500 more than 20 percent since the 2016 presidential election.

Failure to cut corporate taxes would increase concerns about Trump's ability to pass legislation and could shake markets that have been banking on lower tax rates to boost company earnings.

 

Arrow Funds Director of Research John Serrapere put the chances of successfully passing meaningful tax cuts at 50 percent, and he warned that failing could trigger a correction of as much as 15 percent in stocks.

"There's not a lot of confidence. I'm not pessimistic, but there are a lot of pieces that need to be put together," Serrapere said.

At 2:13 p.m. (1915 GMT), the Dow Jones Industrial Average was down 0.15 percent at 23,425.96, while the S&P 500 had lost 0.09 percent to 2,582.27.

The Nasdaq Composite added 0.03 percent to 6,752.33.

Intel fell 1.58 percent and Microsoft lost 0.45 percent, both accounting more than any other companies for the S&P 500's decline.

All three major indexes were on track to end lower for the week, with the S&P 500 and the Dow set to end lower for the first time in nine weeks.

Seven of the 11 major S&P sectors fell, with the energy index's 1.07 percent dip leading the decliners as oil prices fell.

Nvidia jumped 6 percent and hit a record high after the chipmaker's revenue forecast for the current quarter topped estimates.

A rise in media stocks also helped limit the slide.

Disney rose 2.78 percent as the promise of a new "Star Wars" trilogy overshadowed its weak quarterly results.

Twenty-First Century Fox, Time Warner Inc, Comcast and News Corp were up between 1.0 percent and 7.3 percent, and were among the top boosts on the S&P 500 and the Nasdaq.

Declining issues outnumbered advancing ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.19-to-1 ratio favoured advancers.

(Reporting by Tanya Agrawal and Sweta Singh; Editing by Savio D'Souza and James Dalgleish)