S&P 500; US Indexes Fundamental Daily Forecast – Tax Reform Delay Biggest Concern for Investors

The major U.S. stock indexes closed lower on Thursday after two Republican Senators raised some concerns about the tax bill. Earlier in the session, the indexes were supported by stronger-than-expected U.S. retail sales.

The Dow reached an all-time high during in the session, but the lower close ended a five-day winning streak. The S&P 500 Index closed lower, pressured by weakness in health care and materials stocks.

In the cash market, the benchmark S&P 500 Index settled at 2652.01, down 10.84 or -0.41%, the blue chip Dow Jones Industrial Average closed at 24508.66, down 76.77 or -0.31% and the tech-based NASDAQ ended the session at 6859.57, down 16.23 or -0.24%.

U.S. retail sales increased more than expected in November, helped by a brisk start to the holiday shopping season. Investors read this as a sign of sustained strength in the economy.

The Commerce Department said on Thursday that retail sales rose 0.8 percent last month. Data for October was revised to show sales gaining 0.5 percent instead of the previously reported 0.2 percent rise. Economists were looking for an increase of 0.3 percent in November.

The Labor Department said initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 225,000 for the week-ended December 9. That was the lowest reading since mid-October when claims dropped to 223,000, a level not seen since March 1973.

In other news, Import Prices came in at 0.7%, matching estimates. Flash Manufacturing PMI came in at 55.0, up from 53.9 and better-than-the 54.0 estimate. Flash Services PMI came in below expectations at 52.4. Business Inventories fell 0.1% as expected.

Forecast

U.S. stock index futures turned around after early session weakness on Friday. At 1143 GMT, the U.S. futures indexes are all pointed higher. Traders may be shaking off concerns about a delay in U.S. reform, or they may be looking forward to today’s economic data.

At the start of trading today, two Republicans are expressing concerns about the tax bill. Senator Mike Lee appears to be undecided and Senator Marco Rubio opposes the current legislation unless the GOP expands the proposed child tax credit.

Stocks could be influenced by a series of minor economic reports. These include the Empire State Manufacturing Index, Capacity Utilization Rate, Industrial Production and TIC Long-Term Purchases.

Today is also a Quadruple Witching Day so we may see some volatility at the close.