Profit Taking Contributes To Weakness On Wall Street - U.S. Commentary

(RTTNews) - After climbing to record highs in the previous session, stocks gave back some ground over the course of the trading session on Tuesday.

The Dow dipped 37.45 points or 0.2 percent to 24,754.75, the Nasdaq slid 30.91 points or 0.4 percent to 6,963.85 and the S&P 500 fell 8.69 points or 0.3 percent to 2,681.47.

Profit taking contributed to the weakness on Wall Street, as traders cashed in on the strength seen in recent sessions.

Selling pressure was somewhat subdued, however, as House Republicans voted to approve the first major tax reform legislation in several decades, cutting tax rates for businesses and individuals.

The House voted 227 to 203 in favor the bill known as the Tax Cuts and Jobs Act, with the vote coming down largely along party lines. Only 12 Republican congressmen voted against the bill.

The bill reduces the corporate tax rate to 21 percent from 35 percent, gives tax breaks to pass-through businesses and includes provisions intended to encourage domestic business investment.

The legislation also reduces tax rate for most individuals, although the tax cuts for individuals are set to expire.

Following the vote in the House, the Senate is expected to approve the bill later in the day by a narrow margin.

The approval of the legislation, which President Donald Trump has pledged to sign, comes even though recent polls show a majority of Americans disapprove of the bill.

Republicans claim that the bill will lead to stronger economic growth, while Democrats argue the legislation will give tax cuts to the wealthy at the expense of the middle class.

On the U.S. economic front, the Commerce Department released a report showing an unexpected increase in housing starts in the month of November.

The report said housing starts jumped 3.3 percent to an annual rate of 1.297 million in November from a revised 1.256 million in October. Economists had expected housing starts to drop by 3.7 percent.

Commercial real estate stocks showed a substantial move to the downside on the day, dragging the Morgan Stanley REIT Index down by 2.1 percent. The index ended the previous session at its best closing level in a month.

Significant weakness was also visible among utilities stocks, as reflected by the 1.6 percent drop by the Dow Jones Utilities Average. With the decrease, the average ended the session at a two-month closing low.

Housing, telecom and computer hardware stocks also moved to the downside, while some strength was visible among oil service stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index and the German DAX Index both dropped by 0.7 percent.

In the bond market, treasuries showed a significant move to the downside as the House GOP voted to approve their tax reform bill. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 7.1 basis points to 2.463 percent.

Trading on Wednesday may be impacted by reaction to the National Association of Realtors' report on existing home sales in November.