(Bloomberg) -- If the stock market offers any insight on the fate of Republican tax cuts, Tuesday's trading seems to be signaling the bill's prospects have dimmed somewhat.
As the debate rages on the specifics of the House proposal, stocks seen as the biggest beneficiaries of any cuts are moving lower. The KBW Bank Index fell the most since September, while the Russell 2000 Index of smaller companies headed for its worst day in almost three months. A Goldman Sachs basket of stocks with the highest effective tax rate fell 0.4 percent as of 2 p.m. in New York, compared with a gain of 0.1 percent for those with the lowest burden.
While it's open to debate just how much the stock market has priced in the likelihood of passage, equities have shown at least temporary reaction to details of the plan that can impact corporate earnings. Goldman assigns a 65 percent probability of cuts passing by the first quarter.
To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net.
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Randall Jensen
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