NEW YORK - U.S. stocks finished mixed on Thursday as investors pored over House Republican's tax proposals and President Trump picked Fed Governor Jerome "Jay" Powell to lead the Federal Reserve. Weak results from consumer and health-care companies pulled those parts of the market lower.
The House tax plan would cut the top corporate tax rate to 20 percent from 35 percent. That helped smaller, more U.S.-focused companies, because they generally pay higher tax rates than larger firms that do a lot of business in other countries. Home improvement retailers and homebuilders slumped because the bill would reduce the amount of interest Americans can deduct on new mortgages. That could hurt home sales, particularly in high-cost areas. Luxury homebuilder Toll Brothers sank $2.84, or 6.1 percent, to $43.79.
The GOP tax plan was mostly what investors expected, said Mona Mahajan, U.S. investment strategist for Allianz Global Investors. She noted that the bill would immediately lower the corporate tax rate instead of reducing it over time, an idea some Republicans had proposed earlier.
"That alone is a win for corporations becoming more competitive with global peers, especially the small cap and domestic companies," she said.
The choice of Powell also didn't surprise Wall Street, as he had been seen as the most likely pick for a week or so. If approved by the Senate, Powell would replace current Chair Janet Yellen when her term ends in February. He has been a Fed policymaker since 2012 and is generally seen as favoring lower interest rates than other top candidates. Investors expect him to keep raising rates at the gradual pace the Fed has maintained over the last few years while continuing to let its bond portfolio shrink.
The Standard & Poor's 500 index rose 0.49 points to 2,579.85. The Dow Jones industrial average added 81.25 points, or 0.3 percent, to a record 23,516.26. The Nasdaq composite sank 1.59 points to 6,714.94. The Russell 2000 index of smaller-company stocks picked up 3.77 points, or 0.3 percent, to 1,496.55. Slightly more stocks on the New York Stock Exchange fell than rose.
The House tax plan could go through major changes, and Republicans have a slimmer majority in the Senate. As written, it would double the standard deduction used by most taxpayers to $12,000 for individuals and $24,000 for families and increase the child tax credit. The deduction for state income taxes would be eliminated and a deduction for local property taxes would shrink. It sets a 10 percent tax on profits for overseas subsidiaries of U.S. corporations and would let U.S. companies return profits at a onetime 12 percent rate.