(Bloomberg) -- The Republican bill to overhaul the U.S. tax code is finally set in stone, according to House Ways and Means Committee Chairman Kevin Brady. That’ll come as some relief to investors, who fled en masse from funds that hold some of the biggest winners from anticipated tax cuts amid concern that Republican lawmakers had gotten cold feet.
On Monday, the iShares Russell 2000 exchange-traded fund, ticker IWM, suffered $1.2 billion in outflows -- the biggest daily drop of 2017 -- and followed that up with more than $900 million in assets out the door on Thursday after Republican Senator Marco Rubio of Florida indicated that he wouldn’t vote for the bill unless the child tax credit was expanded.
The Financial Select Sector SPDR Fund, ticker XLF, also had a pair of withdrawals that were among its biggest of the year over the past four sessions.
Some of the market reaction also may be fueled by a “sell the news” attitude, which strategists including B. Riley FBR’s Benjamin Salisbury sees as possible.
The Russell 2000 Index gained 1.3 percent in trading on Friday, with XLF up 0.6 percent, getting a significant boost after Rubio reportedly said he would vote yes on the tax bill. Since then, his spokeswoman has said he’s still a “no” until he sees that the bill text “significantly” raises the child tax credit. Of course, if the bill is solidified as Representative Brady said earlier, that could change to a “yes” anytime.
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