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NEW YORK, Sep 14 (Reuters) – Wall Street lost ground Tuesday as economic uncertainties and the increasing likelihood of a corporate tax hike dampened investor sentiment and offset signs of easing inflation.
Optimism faded throughout the session, reversing an initial rally following the Labor Department’s consumer price index report. All three major US stock indices ended in negative territory as a reminder that September is a historically difficult month for stocks.
So far this month the S&P 500 is down about 1.8%, despite the benchmark index’s up over 18% since the start of the year.
“Chances are the market is simply ready to go through an overdue correction,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “From a seasonal point of view, September tends to be the showcase period for fund managers.”
The advent of the highly contagious Delta COVID variant has increased bearish sentiment regarding the recovery from the global health crisis, and many now expect a significant correction in equity markets by year-end.
“We’re still in a correction mode that people have been asking for months,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Economic data points were missing estimates, and that coincided with the rise in the delta variant.”
The Consumer Price Index report delivered a lower-than-consensus reading in August, a slowdown that supports US Federal Reserve Chairman Jerome Powell’s claim that inflation spikes are temporary and allayed market fears that the central bank is tightening sooner than expected monetary policy will begin.
US Treasury bond yields fell on the data pushing financials and investor love returned to growth at the expense of value.
Long-awaited corporate tax hikes to 26.5% from 21% if Democrats prevail are nearing realization as President Joe Biden’s $ 3.5 trillion budget package moves closer to adoption.
Unofficially, the Dow Jones Industrial Average fell 284.29 points, or 0.82%, to 34,585.34, the S&P 500 fell 25.14 points, or 0.56%, to 4,443.59, and the Nasdaq Composite fell 64.77 points or 0.43% to 15,040.81.
Apple Inc’s shares fell after the company unveiled its iPhone 13 and added functionality to its iPad and Apple Watch gadgets at its largest product launch event of the year as it comes under increased court scrutiny for its business practices.
Intuit Inc made strides after TurboTax maker announced it was taking over digital marketing company Mailchimp for $ 12 billion.
CureVac slipped after the German biotech company canceled manufacturing contracts for its experimental COVID-19 vaccine. (Reporting by Stephen Culp; additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; editing by Richard Chang)