Stock indexes wobbled between modest gains and losses Wednesday, eventually ending nearly flat, as the White House unveiled broad outlines of its plan to slash tax rates but left many of the details to be determined.
Anticipation for a big tax cut has been one of the main drivers behind the stock market's surge since November, when Republicans swept into Washington. The White House delivered a big number Wednesday, with officials saying they hope to cut the top corporate tax rate to 15% from 35%.
But many specifics have yet to be negotiated — such as how much it will affect the government's budget deficit — and they will need to be hammered out with Congress. That left investors questioning exactly how much benefit will flow through to corporate profits, and how much stock prices should climb beyond what they already have.
"Tax reform will be good, but a lot of that has already been priced into the market," said David MacEwen, co-chief investment officer for American Century Investments.
The Standard & Poor's 500 index slipped 1.16 points, or less than 0.1%, to 2,387.45. It briefly climbed above its record closing level of 2,395.96 earlier in the day.
The Dow Jones industrial average fell 21.03 points, or 0.1%, to 20,975.09, and the Nasdaq composite slipped 0.27 point, or less than 0.1%, to 6,025.23. Stocks of smaller companies did better, with the Russell 2000 index of small-caps rising 8.35, or 0.6%, to 1,419.43.
The proposal for a 15% corporate tax rate probably is just an opening salvo, and negotiations with Congress may push that figure higher, analysts said. Any corporate tax cut would help boost profits for businesses, which would help justify the S&P 500 index's 11.6% surge since the November election. Some investors are worried stocks have grown too expensive because prices have climbed faster than corporate profits.
MacEwen said several elements of the tax proposal would be beneficial, including how foreign profits would be treated, but what Washington ultimately gets approved may fall short of the stock market's expectations. Also still uncertain is how much the final proposal would boost the economy, which would drive profits further and justify yet more stock price gains.
Of course, tax policy isn't the only thing pushing stocks higher, MacEwen said. Businesses are in the midst of reporting their profits for the first three months of the year, and they've largely been better than expected. Analysts expect this to be the strongest quarter of growth in years.
Edwards Lifesciences stock jumped 10.5% to $109.30, notching to the largest gain in the S&P 500, after it reported revenue and profit for the latest quarter that was stronger than analysts expected. The company, based in Irvine, also raised its profit forecast for the year.
Twitter advanced 7.9% to $15.82 as investors saw promise in its growing user base. The social media company also reported its first drop in revenue since going public, but the decline was less severe than expected.
Wynn Resorts rose 5.9% to $125.19 after reporting revenue and profit that beat expectations. The company saw stronger revenue from its Las Vegas casino, as well as its new Macau resort, which opened in August.
On the losing end was U.S. Steel, which reported a loss for the first quarter and cut its profit forecast for the year. Its stock dived 26.8% to $22.78.
Seagate Technology, a maker of hard drives and other data storage products, dropped 16.8% to $42.01 after reporting weaker revenue for the latest quarter than analysts expected. Its profit nevertheless topped expectations.
Meanwhile, Goleta-based Deckers Outdoor rose 3.1% to $60.55 after the maker of Ugg boots, Teva sandals and other footwear said it may put itself up for sale.
In European stock markets, the French CAC 40 and the FTSE 100 in London each went up 0.2% and the German DAX was nearly flat. In Asia, the Japanese Nikkei 225 jumped 1.1%, and the South Korean Kospi and Hong Kong's Hang Seng each rose 0.5%.
Benchmark U.S. crude oil rose 6 cents to $49.62 a barrel. Brent crude, which is used to price international oils, fell 28 cents to $51.82 a barrel.
Natural gas rose 10 cents to $3.14 per 1,000 cubic feet, wholesale gasoline fell 3 cents to $1.59 a gallon and heating oil fell 1 cent to $1.54 a gallon.
Gold fell $3 to $1,264.20 an ounce, silver fell 23 cents to $17.36 an ounce and copper rose 1 cent to $2.59 a pound.
The euro slipped to $1.0899 from $1.0939, while the dollar rose to 111.38 yen from 111.09 yen. The British pound rose to $1.2843 from $1.2830.
U.S. government bond prices rose. The yield on the 10-year Treasury note dropped to 2.30% from 2.34%.
2:55 p.m.: This article was updated with closing prices, context and analyst comment.
1:45 p.m.: This article was updated with the close of markets.