The House passed the Republican tax bill in a 223-207 party line vote on Tuesday, readying the Senate to vote on the final tax bill Tuesday night. You’d think the stock market would cheer the result, since the corporate-friendly tax bill would slash companies’ tax burdens. Yet, major stock indices including the Dow Jones, S&P 500, and NASDAQ all fell following the House tax bill vote.
The S&P 500 was down about 0.3%, the Dow Jones Industrial Average fell 0.1%, and the NASDAQ was down 0.5%. The Russell 2000 dipped 0.65%. Those aren’t exactly extravagant drops. But one might think markets would soar given the $1.5 trillion tax bill’s historic scope and heavy tilt toward tax relief for private corporations.
So what’s going on? There may be a number of factors at play here—including that investors may have expected the GOP tax bill to pass Congress for a while now, and so the bullishness over tax reform may have been largely baked into the market. For instance, the tax bill’s chances of passing have risen on the binary options prediction market PredictIt over the past month (with a big spike in the past week as the House and Senate worked out their differences).