U.S. stocks declined Tuesday as big technology companies and smaller firms gave up some of their recent gains. Stocks hit record highs over the previous two days as the Republican-backed tax bill made its way through Congress.
Smaller companies in particular have surged because investors feel they will be major beneficiaries of lower corporate tax rates. High-dividend stocks dropped as bond yields rose.
Investors like the proposed tax cut because it would boost corporate profits and likely raise stock prices along with it. The bill would initially cut taxes for most Americans but by 2027 would increase tax bills for most.
While stocks weren’t doing much Tuesday, bond prices fell. The yield on the 10-year Treasury note rose to its highest price in more than a month, to 2.45 percent from 2.39 percent late Monday.
Invesco Global Market Strategist Kristina Hooper said two factors are sending bond yields higher: investors are selling bonds to buy stocks as the tax bill appears likely to pass, and they also feel the bill may contribute to inflation.
The Standard & Poor’s 500 index lost 0.3 percent, to 2,681.47. The Dow Jones industrial average shed 37.45 points, or 0.2 percent, to 24,754.75. The Nasdaq composite gave up 0.4 percent, to 6,963.85.