NEW YORK – A gauge of global equities hit an intraday record on Monday as a bounce in Spain helped lift European stocks, while Wall Street declined following a technology-led rally last week and a report that the US House of Representatives was discussing a gradual tax cut.
Bloomberg reported that the corporate tax rate may be reduced gradually, by 3 percentage points a year, to 20 percent.
“Clearly tax policy is important to corporations,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“However far-fetched this idea is or whether it has any legs or not – we don’t know yet, but markets always react to the very first sense of anything.”
The Dow and S&P 500 retreated on the heels of seven straight weeks of gains that left both indexes at record levels. The Nasdaq was slightly below the unchanged mark after scoring its best weekly gain in nearly a year last week.
Stocks pared gains late in the session after the New York Times reported Federal Reserve Governor Jerome Powell is expected to be named the next head of the US central bank, replacing Janet Yellen.
The Dow Jones Industrial Average fell 85.45 points, or 0.36 percent, to 23,348.74, the S&P 500 lost 8.24 points, or 0.32 percent, to 2,572.83 and the Nasdaq Composite dropped 2.30 points, or 0.03 percent, to 6,698.96.
MSCI’s world equity index, which tracks shares in 47 countries, gained 0.05 percent after hitting a record of 496.77, its highest level in a week. The index has surged nearly 18 percent for the year, and is on pace to notch its best annual performance since 2013.
Spanish markets supported European shares after an opinion poll showing waning support for independence soothed investors’ concerns over Catalan secession. Spanish stocks were up 2.44 percent and set for their best day since Oct 5.
Spain’s benchmark 10-year bond yield last yielded 1.49 percent, down from 1.502 percent late on Friday.
The pan-European FTSEurofirst 300 index rose 0.16 percent. European stocks have rallied this year on a healthier economy, coupled with convincing growth in corporate earnings and a reduction in political risk.
US Treasury yields fell at the start of a week of policy meetings by 3 major central banks, a steady stream of economic data and the expected announcement on a new Federal Reserve chair, extending declines after the Times report.
The Bank of England is widely expected to raise rates on Thursday, reversing its monetary easing following Britain’s June 2016 vote to leave the European Union, while the US Federal Reserve is expected to hold rates steady. The Bank of Japan will also issue a rate decision this week.
Benchmark 10-year Treasury notes last rose 17/32 in price to yield 2.3684 percent, down from 2.428 percent late on Friday.
The dollar index fell 0.48 percent, with the euro up 0.39 percent to $1.1653.
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