Stocks were mixed Monday as Republicans in Congress made progress on a bill to overhaul the nation’s tax code.
The Standard Poor’s 500 index rose 8 points, or 0.3 percent, to 2,650 as of 2:28 p.m. Eastern time.The Dow Jones industrial average gained 148 points, or 0.6 percent, to 24,379. The Nasdaq composite lost 36 points to 6,892.
Financial markets rose sharply earlier in the day after the Senate passed.
Banks, which are expected to benefit from the tax cuts, rose more than the rest of the market in early trading Monday, with Bank of America (BAC) shares jumping 3.4 percent. Consumer-focused and industrial companies were also putting up big gains. Cable TV and entertainment company Comcast (CMCSA) rose 3.4 percent and Boeing (BA) rose 2.2 percent.
The House, which passed its own tax bill in November, and Senate must now produce a combined measure before sending it to President Donald Trump to signed into law. Wall Street analysts think that could happen by year-end.
“We think the chances the tax bill will be finished by the end of 2017 have risen to around 65 percent (up from 50 percent before the Senate vote), and our estimate of the chances of the bill passing regardless of the timing are now in the 80-85 percent range,” analysts with Keefe, Bruyette Woods said in a research note.
“Tax reform legislation has now passed both chambers of Congress and looks very likely to become law by year-end, probably within the next two weeks,” Goldman Sachs economists said in a report on Monday.
They emphasized, however, that “the compromise legislation we expect to emerge from the conference committee would reduce the effective corporate tax rate by only a couple of percentage points” relative to its current levels.
Along with financial firms, smaller companies look to be some of the biggest winners from the tax overhaul because they generally pay higher rates than their bigger rivals.
Other likely winners include telecoms, which pay some of the highest effective tax rates among the big companies in the SP 500. Telecommunication stocks jumped 2.2 percent for the biggest gain of the 11 sectors in the index.
Technology companies, meanwhile, will likely get less of a boost. They already were typically paying the lowest effective tax rates of the 11 sectors in the SP 500, analysts said.
Tech stocks in the index were down 1.3 percent, well behind the rest of the market. It’s a very different position for the sector, which has led the market for most of this year and has nearly doubled the performance of the SP 500.