The US markets closed lower on Monday, as a report that the House of Representatives is considering phasing in a cut to corporate taxes rather than enacting them immediately weighed on investors’ confidence. The House is discussing a gradual phase-in for the corporate tax-rate cut that President Donald Trump and Republican leaders want - a schedule that would have the rate reach 20 percent in 2022. Tax cuts are the centerpiece in President Donald Trump’s business-friendly agenda and are viewed as critical to sustaining the stock market’s record-setting rally. With the Fed expected to hold the meet this week investors will focus on its outlook on the economy, inflation and disruptions from recent hurricanes.
On the economy front, consumer spending leaped 1% in September, the biggest gain since early mid-2009, just as the current economic recovery got underway. Personal income rose 0.4%. The savings rate fell to 3.1%, the lowest level since December 2007. The PCE index, the Federal Reserve’s preferred inflation gauge, increased 0.4% in September. But the closely followed core rate that strips out food and energy only rose 0.1%. Inflation, meanwhile, still appears to be contained. The 12-month rate of PCE inflation moved up to 1.6% from 1.4%, but the core rate remained stuck at a two-year low of 1.3%. Both are well below the Fed’s 2% target.
The Dow Jones Industrial Average lost 85.45 points or 0.36 percent to 23,348.74, the Nasdaq dropped 2.3 points or 0.03 percent to 6,698.96, and the S&P 500 edged lower by 8.24 points or 0.32 percent to 2,572.83.