Optimism About Tax Reform May Lead to Strength on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a higher opening on Monday, with stocks poised to add to the gains posted last week.
Stocks may benefit from optimism about the outlook for Republican tax reform, which would cut corporate and individual tax rates.
?The House and Senate have agreed to a unified tax plan, and we will deliver it to the President?s desk just in time for Christmas,? said House Majority Leader Kevin McCarthy, R-Calif.
He added, ?We have been working toward this for years, and now the American people are closer to a plan that will deliver higher wages, lower taxes, a simpler system, and a stronger American economy.?
The House is scheduled to vote on the bill on Tuesday, with a vote in the Senate expected to follow short on the heels.
Stocks moved notably higher during trading on Friday following the downturn seen over the course of the previous session. The upward move on the day lifted all three of the major averages to new record closing highs.
The major averages gave back some ground going into the close but remained firmly positive. The Dow rose 143.08 points or 0.6 percent to 24,651.74, the Nasdaq spiked 80.06 points or 1.2 percent to 6,936.58 and the S&P 500 climbed 23.80 points or 0.9 percent to 2,675.81.
For the week, the Dow surged up by 1.3 percent, the Nasdaq jumped by 1.4 percent and the S&P 500 advanced by 0.9 percent.
The strength on Wall Street came as traders expressed optimism about Republican lawmakers passing tax reform legislation.
Senators Marco Rubio, R-Fla., and Bob Corker, R-Tenn., indicated they intend to vote for a revised tax reform bill, suggesting Republicans will have the votes to approve the plan.
A House-Senate conference committee seeking to negotiate differences in the bills passed by the two chambers is expected to release their combined legislation later in the day.
On the U.S. economic front, the Federal Reserve Bank of New York released a report showing growth in New York manufacturing activity slowed by more than anticipated in the month of December.
The New York Fed said its general business conditions index dropped to 18.0 in December from 19.4 in November, although a positive reading still indicates growth in regional manufacturing activity. The index had been expected to dip to 18.6.
Meanwhile, a separate report released by the Federal Reserve showed a smaller than expected increase in industrial production in the month of November.
The Fed said industrial production edged up by 0.2 percent in November after jumping by an upwardly revised 1.2 percent in October.
Economists had expected production to climb by 0.3 percent compared to the 0.9 percent increase originally reported for the previous month.
Semiconductor stocks showed a substantial move to the upside on the day, driving the Philadelphia Semiconductor Index up by 1.5 percent. Industry giant Intel (INTC) helped to lead the sector higher.
Significant strength was also visible among financial stocks, with the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index climbing by 1.3 percent and 1.5 percent, respectively.
Software, steel, and biotechnology stocks also moved notably higher, while natural gas and railroad stocks moved to the downside.