Wall Street wavers as Disney falls and tech rebounds

Traders work on the floor of the New York Stock Exchange shortly after the opening bell, Dec 5, 2017.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell, Dec 5, 2017.PHOTO: REUTERS

NEW YORK (REUTERS) - Wall Street treaded water on Tuesday (Dec 5) as Microsoft and other technology stocks rebounded and Walt Disney fell, while investors assessed how a Republican tax overhaul would impact corporate earnings.

Microsoft rose 1.27 per cent, helping push the S&P information technology index up 0.76 per cent. This year's top-performing sector remains down about 3 per cent since it has sold off over the past week, with investors reallocating money to banks, retailers and other stocks seen winning most from tax cuts promised by President Donald Trump.

The Bill passed on Saturday by Republican senators included a last-minute change retaining the corporate alternative minimum tax, or AMT, which had initially been removed.

That put Senate Republicans on a collision course with Republicans in the House of Representatives, whose own tax bill repealed the corporate AMT and who are already calling for the tax to be eliminated in the final legislation. Including the AMT could negate parts of the bill seen as beneficial to tech companies and other corporations.

"Sentiment still remains that tax reform will get done and we will get a 20-per-cent tax rate, and that will boost earnings significantly," said Lindsey Bell, an investment strategist at CFRA Research.

At 2.15pm ET, the Dow Jones Industrial Average was down 0.15 per cent at 24,252.89 points, while the S&P 500 had lost 0.02 per cent to 2,638.86.

The Nasdaq Composite added 0.33 per cent to 6,797.42.

Eight of the 11 major S&P sectors were lower, led by losses in telecom services and utilities.

Shares of Twenty-First Century Fox climbed 0.6 per cent after a report that Walt Disney was in the lead to acquire much of Fox's media empire, though rival suitor Comcast remained in contention.

Disney shares fell 2.2 per cent and Comcast also slipped 1.4 per cent.

McDonald's rose 1.43 per cent, providing the biggest boost to the Dow, after Jefferies upgraded the stock with a "buy" rating.

Toll Brothers fell 7.4 per cent after the luxury homebuilder's profit and revenue missed analysts' expectations as it sold homes at prices lower than its own estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favoured decliners.