Dipo Olowookere
By Investors Hub
The major U.S. index futures are pointing to a higher opening on Thursday following the lackluster performance seen in the previous session.
Optimism about the economic impact of the Republican tax reform bill may generate some buying interest after GOP lawmakers managed to send the legislation to President Donald Trump?s desk on Wednesday.
The reaction to the passage of the bill has been somewhat subdued thus far, however, as traders question if the potential impact of the legislation has already been priced into the markets.
After failing to sustain an initial upward move, stocks showed a lack of direction over the course of the trading session on Wednesday. The major averages spent much of the day lingering near the unchanged line.
The major averages eventually ended the session slightly lower. The Dow dipped 28.10 points or 0.1 percent to 24,726.65, the Nasdaq edged down 2.89 points or less than a tenth of a percent to 6,960.96 and the S&P 500 slipped 2.22 points or 0.1 percent to 2,679.25.
The choppy trading on Wall Street came as traders shrugged off news that Republican lawmakers managed to send a sweeping tax reform bill to President Donald Trump’s desk.
The House voted 224 to 201 in favor of the bill known as the Tax Cuts and Jobs Act, with the vote coming down largely along party lines.
The bill reduces the corporate tax rate to 21 percent from 35 percent, gives tax breaks to pass-through businesses and includes provisions intended to encourage domestic business investment.
The legislation also reduces tax rate for most individuals, although the tax cuts for individuals are set to expire.
The House voted in favor of a similar bill on Tuesday but needed to re-vote due to procedural issues related to the reconciliation process.
The Senate voted 51 to 48 in favor of the $1.5 trillion tax reform bill early this morning, with the vote coming down strictly along party lines.
While GOP lawmakers argue reductions in the tax rates for businesses and individuals will boost economic growth, Democrats claim the legislation will give tax cuts to the wealthy at the expense of the middle class.
The bill also includes a repeal of Obamacare’s requirement that everyone has health insurance as well as a provision allowing energy development in Alaska’s Arctic National Wildlife Refuge.
In remarks at a cabinet meeting ahead of the vote, Trump described the tax reform bill as an “historic victory for the American people.”
On the U.S. economic front, the National Association of Realtors released a report showing a much bigger than expected jump in existing home sales in the month of November.
NAR said existing home sales soared by 5.6 percent to an annual rate of 5.81 million in November from an upwardly revised 5.50 million in October.
Economists had expected existing home sales to rise to a rate of 5.52 million from the 5.48 million originally reported to the previous month.
With the much bigger than expected increase, existing home sales reached their highest level since hitting 6.42 million in December of 2006.
Most of the major sectors showed only modest moves on the day, contributing to the lackluster close by the broader markets.
Oil service stocks showed a substantial move to the upside, however, with the Philadelphia Oil Service Index surging up by 2.5 percent. With the jump, the index reached its best closing level in well over a month. The strength among oil service stocks came amid an increase by the price of crude oil.
Significant strength was also visible among steel stocks, as reflected by the 2 percent gain posted by the NYSE Arca Steel Index. The index reached its best closing level in ten months.
Gold, natural gas, and railroad stocks also saw notable strength, while commercial real estate stocks showed a considerable move to the downside.
