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Traders describe market's decline as a 'natural' response to tax reform snag

  • After the Senate revealed its version of tax reform, the market fell and rebounded in response to rumors of delays.
  • Feeling the reaction was milder than it could have been, traders attributed the volatility to lack of confidence in Republicans' promises.

The market fluctuated during trading Thursday after details emerged about the Senate's tax reform plan. Some traders said they expected more movement from the market, given the uncertainty of tax reform.

"The market does get a little jittery as we are trading at the highs. So what we saw today was exactly that. Investors had a reason to sell this morning. But I think as the day went on, investors felt a little more comfortable with the news we were seeing," Jonathan Corpina of Meridian Equity Partners said on CNBC's "Closing Bell."

The Dow Jones Index briefly fell 250 points Thursday, but recovered losses throughout the afternoon, finishing the day about 100 points lower.

Traders attributed the volatility to details of the Senate's tax reform plan that broke throughout the day. The proposed plan would seek to postpone the corporate tax cut — from 35 percent to 20 percent — until 2019. Conversely, the House bill sought to impose the change immediately.

"When we talk about tax reform — uncertainty and delays — those two words have been thrown around all day today. I'm surprised they haven't had a more negative effect on the markets," Corpina added.

Jack Bouroudjian, trader and co-founder of UCX, agreed, adding that delays will likely bring economic stagnation. He noted the bond market is anticipating slower growth, despite what Republicans backing the plan have claimed.

"If we are going to see dysfunction with this tax reform, look for the market to get worried and pull back a little," he said.

Despite tax reform pressures, neither traders seemed particularly concerned with the Dow's behavior Thursday. Corpina even welcomed a market pullback, especially in tech.

"I'm not concerned with the sell-off; this is natural," he said. "I'd like to see the market consolidate at these levels that we are at here. We went from 2,550 to 2,595 in the S&P really quick. It needs to come back in a little and settle in for a bit of time," he said.

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