Tech stocks rose on the back of gains in Facebook. The rest of the market took a pause as investors awaited more details on what the final tax overhaul from Congress will look like.
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The S&P 500 traded just below breakeven, with energy falling 1 percent to lead decliners. Energy stocks were pressured by falling oil prices. Information technology, meanwhile, rose 0.6 percent.
Tech stocks were on track Wednesday to post consecutive gains after being pressured over the past week.
Evercore ISI initiated Facebook with an outperform rating. Analyst Anthony DiClemente said Facebook will lead the “FANG” stocks higher in 2018. Facebook shares rose more than 1 percent.
Investors also kept an eye on Washington as they awaited new details on Congress negotiations to overhaul the U.S. tax code. The GOP-led Congress passed a bill on Saturday that increased the chances of the overhaul —which would significantly lower corporate taxed — taking place this year.
But the Senate’s bill is different than another one passed by the House. Now both chambers have to work on and pass a new bill before sending it to the White House.
Expectations of tax reform have been a boon for U.S. stocks all year, helping then surge to record highs. But the rip-roaring rally has slowed down recently. The S&P 500 and Nasdaq completed a first three-day losing streak on Tuesday, their first since August.
“You definitely have a market that’s taking a pause,” said Art Hogan, chief market strategist at B. Riley FBR. “I think it’s really about how quickly we’ve rotated into the pro-tax reform sectors.”
Financials, one of the sectors that would theoretically benefit greatly from lower corporate taxes, have been on a tear recently. The sector is up nearly 2 percent over the past week. Tech, meanwhile, is down more than 1 percent in the same time period.
Komal Sri-Kumar, president of Sri-Kumar Global Strategies, said the market is taking a pause as it’s “not clear that the tax changes that the Senate approved during the early hours of Saturday are going to be as stimulative as the markets first thought.”
U.S. equities kicked off the session trading lower as overseas stocks declined. Asian stocks fell broadly, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng index both pulling 2 percent. The Shanghai composite also fell 0.3 percent.
In Europe, equities also declined. The German Dax dropped 0.4 percent while the Stoxx 600 index slipped 0.1 percent.
“We’re seeing some end-of-year jitters and we’re now taking some profits,” said Adam Sarhan, CEO of 50 Park Investments.
In corporate news, drone maker AeroVironment shares hit an all-time high after the company posted strong quarterly sales.