Small Companies Make Big Gains as US Stocks Climb
TAX PLANS: The proposed a tax plan cuts tax rates for individuals and corporations, reduces the number of personal tax brackets, and nearly doubles the standard deduction used by most Americans. It would lower the top corporate tax rate to 25 percent from its current 35 percent.
With months of negotiations likely ahead and many key details missing, it’s not clear what kind of plan might ultimately pass. But Warne said a corporate cut would help smaller, domestically-focused companies more than large ones.
“A corporate tax cut tends to be better news for smaller companies because they don’t have as many ways to reduce their tax rate,” said Warne.
RATE FOCUS: Investors bet that interest rates will keep rising. The yield on the 10-year Treasury note climbed to 2.31 percent from 2.24 percent. That helped banks, as higher interest rates mean they can charge more to lend money. Bank of America picked up 80 cents, or 3.2 percent, to $25.61 and Citigroup rose $1.65, or 2.3 percent, to $72.59.
Meanwhile companies that pay big dividends took steep losses. Kimco Realty, a real estate investment trust that owns outdoor shopping centers, fell 77 cents, or 3.8 percent, to $19.39. Household products maker Procter & Gamble gave up $1.73, or 1.9 percent, to $90.92. Rising bond yields made government bonds a more appealing investment to investors seeking income.
TECH GAINS: Chipmaker Micron Technology had a better quarter than investors expected, and its stock rose $2.70, or 7.9 percent, to $36.88. Facebook climbed $3.53, or 2.1 percent, to $167.74 and Google’s parent company Alphabet picked up $20.81, or 2.2 percent, to $958.24.
LACES UNTIED: Shoe and athletic gear maker Nike said sales in the U.S. remained weak in its first fiscal quarter and steep discounts continued to affect its business. While its earnings and revenue were better than analysts expected, analysts chalked much of that up to lower taxes, stock repurchases, and spending cuts.
Nike lost $1.84, or 3.4 percent, to $51.87 and rival Under Armour gave up 26 cents, or 1.6 percent, to $16.28. Sporting goods retailers also slipped.
POWERING DOWN: Utility company Scana dropped after state police in South Carolina said they are looking into “potential criminality” by the company after a nuclear plant construction project was shut down after some $10 billion had already been spent. Scana said it will cooperate fully with the inquiry. Its stock sank $4.04, or 7.3 percent, to a two-year low of $51.53.
Scana’s South Carolina Electric & Gas unit and partner Santee Cooper canceled the project in July after contractor Westinghouse filed for bankruptcy.
LOSING ITS LUSTER: Gold fell to its lowest in a month. The metal’s price declined $13.90, or 1.1 percent, to $1,287.80 an ounce. Two weeks ago gold was at a 12-month high, but it’s fallen sharply since then. Silver lost 6 cents to $16.83 an ounce. Copper rose 1 cent to $2.93 a pound.
CURRENCIES: The dollar got stronger. It rose to 112.69 yen from 112.17 yen. The euro fell to $1.1760 from $1.1798.
OIL: Benchmark U.S. crude added 26 cents to $52.14 a barrel in New York while Brent crude, the standard for international oil prices, fell 54 cents, to $57.90 a barrel in London.
Wholesale gasoline fell 4 cents to $1.65 a gallon. Heating oil remained at $1.85 a gallon. Natural gas rose 6 cents to $2.97 per 1,000 cubic feet.
OVERSEAS: The FTSE 100 index in Britain rose 0.4 percent while Germany’s DAX rose 0.4 percent. The CAC 40 in France added 0.3 percent. Japan’s Nikkei 225 fell 0.3 percent and South Korea’s Kospi dipped less than 0.1 percent. Hong Kong’s Hang Seng index rose 0.5 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay
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