Market Snapshot: Dow industrials skid lower as investors await tax progress

U.S. stocks slumped Tuesday as fears of a more pronounced retreat for equities weighed on investor sentiment. Meanwhile, Wall Street awaits updates to efforts to reform U.S. tax policy.

Early Tuesday, prominent central bankers, including Federal Reserve Chairwoman Janet Yellen, European and Japanese and British central bankers convened in a panel discussion in Frankfurt.

Read: Fed’s Yellen: It’s confusing with so many voices on the FOMC

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, -0.63% fell 71 points, or 0.3%, to 23,338, pressured lower by a decline in shares of Travelers Cos. Inc. TRV, -0.79% and Apple Inc. AAPL, -1.00%

The S&P 500 index SPX, -0.65%  fell 9 points, or 0.4%, at 2,575, while the Nasdaq Composite Index COMP, -0.65% dipped 21 points, or 0.3%, to 6,736.

On Monday, the major U.S. indexes posted modest gains, as uncertainty over the state of Republican tax-cut legislation continued and as blue-chip General Electric Co. GE, -3.36%  hit a more than five-year low. The Dow component led the Dow lower, in percentage terms, for a second straight session.

Need to know: The S&P 500 has been in the black all year—here’s what typically happens next

What could drive markets?

Yellen, European Central Bank President Mario Draghi, Bank of Japan Gov. Haruhiko Kuroda and Bank of England Gov. Mark Carney took part in a moderated discussion on communication and markets, which began at 5 a.m. Eastern.

In comments at that meeting, Yellen stressed that all forward guidance from the Fed should be conditional on the outlook for the economy, meaning forward looking statements won’t always be a certainty. “Market participants seek more than central banks are prepared to offer,” she said.

Earlier at the ECB conference in Frankfurt, Chicago Fed President Charles Evans said a new approach to interest-rate setting may be needed to deal with new shocks, according to prepared remarks.

St. Louis Fed President James Bullard is due to give a speech at an economic breakfast in Louisville, Ky., at 8:15 a.m. Eastern. Later, after the market open, Atlanta Fed President Raphael Bostic is expected to give a speech on economic outlook and monetary policy at a business forum in Montgomery, Ala., at around 1 p.m. Eastern.

Concerns about delays in much-anticipated corporate tax cuts out of Washington have been acting as a drag on stocks, and investors could pay attention to fresh comments on that subject.

Treasury Secretary Steven Mnuchin late Monday ruled out any increase in the corporate tax rate to above 20%, via an interview at The Wall Street Journal CEO Council gathering on Monday. “It’s not going up,” Mnuchin said. “I can tell you this is one of the things the president feels very strongly about.”

What are strategists saying?

“’Buy the dip’” mentality has been in play throughout the year, especially because many investors don’t want to miss the opportunity of a potential rally when the U.S. lowers the corporate tax rate, however, the sharp differences between the House and the Senate suggest there are still many barriers to overcome,” Hussein Sayed, chief market strategist at FXTM, in a note to clients.

“Overstretched valuations, tighter monetary policies, geopolitical risks, a slowdown and high debt levels in China and low inflation, are some of the factors that could potentially trigger a market correction. However, all of these warnings are being ignored, and stocks continue to score new highs,” said Sayed.

“This is just a two-steps forward, one-step back kind of dance, and I just think that we are seeing that one step back,” said Crista Huff, chief analyst at Cabot Undervalued Stocks Advisor. “It’s perfectly natural” to have the markets pull back, she said. Huff said the trend, however, has been “incredibly bullish.”

Which stocks look like key movers?

Buffalo Wild Wings Inc. BWLD, +24.35% shares shot up 28% as The Wall Street Journal reported that a private-equity firm had bid more than $2.3 billion for the restaurant chain.

Advance Auto Parts Inc. AAP, +22.47%  shares shot up 17% after reporting a profit beat that offset a sales miss.

Dick’s Sporting Goods Inc. DKS, -5.40%  fell 5.2% after results that included a weak 2018 outlook.

Home Depot Inc. HD, -0.60% shares slipped 0.6%. The home-improvement giant reported third-quarter earnings that beat analysts’ estimates and increased its guidance for the year partly because of hurricane-related business.

TJX Cos., TJX, -3.43%  fell 4.6% after the off-price retailer reported third-quarter revenue and same-store sales that fell below consensus.

What economic data releases are due?

On the data front, the National Federation of Independent Business said its optimism index rose to 103.8 in October from 103.

A reading for producer prices in October showed a rise of 0.4%, topping expectations of an increase of 0.1% from economists polled by MarketWatch.

Check out: MarketWatch’s Economic Calendar

What are other assets doing?

European stocks SXXP, -0.48% faced a sixth day of losses, as the euro climbed. Asian markets were mostly lower, led by a sharp decline in Australian stocks XJO, -0.88% and not helped by news China industrial production fell in October.

Gold futures GCZ7, -0.54%  fell 0.5% to $1,272.50 an ounce, while U.S. traded oil futures CLZ7, -0.99%  slipped 27 cents, or 0.5%, to $56.48 a barrel. The International Energy Agency said Tuesday that the U.S. is on track to become the leader in oil and gas production by 2025, owing to an unprecedented shale boom. But in its monthly report, the IEA also cut its global demand forecast.

Read: Oil prices drift south as IEA cuts global demand forecast

The ICE U.S. Dollar Index DXY, -0.40% was down 0.4% at 94.135. The British pound GBPUSD, -0.0152%  fell against the dollar on news of weaker-than-expected U.K. inflation.

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