Stocks hit all-time highs after Trump promises a ‘big league’ tax announcement

U.S. equities traded higher on Thursday after President Donald Trump said he would give an announcement regarding taxes in the next few weeks.

“Lowering the overall tax burden on American business is big league … that’s coming along very well. We’re way ahead of schedule, I believe. And we’re going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax,” Trump said at a meeting with airline executives.

The Dow Jones industrial average rose more than 100 points, with Goldman Sachs contributing the most gains.

“It’s almost a resumption of the Trump trade,” said Matt Welller, senior market analyst at Faraday Research. “In his acceptance speech, Trump talked about infrastructure and deregulation, but in recent weeks he’d gotten away from that.”

“This is sort of reigniting those animal spirits,” he said.

The S&P 500 advanced about 0.6 percent, with financials rising 1 percent, hitting a new all-time high.

The Nasdaq composite also hit a fresh all-time high, rising 0.6 percent.

However, ” just because he says there will be an announcement doesn’t mean he will agree with Congress,” said Jeremy Klein, chief market strategist at FBN Securities. “It’s very low volume. It’s pretty quiet and there is a very persistent buyer out there pushing the market higher.”

Equities rose broadly following President Donald Trump’s election, but have mostly traded sideways this year as investors look for clues about the administration’s plans on corporate tax cuts, deregulation and government spending.

NYSE Traders on the floor.

Andrew Renneisen | Getty Images
NYSE Traders on the floor.

“Basically, the market is stuck in a tight trading range, and it’s unlikely we’ll see a catalyst to take us out of it,” said Peter Cardillo, chief market economist at First Standard Financial. “Political worries are the factor keeping the market in this range.”

“Remove that, and the market would be up 3-to-4 percent,” he said.

The S&P 500 traded within a 1 percent range for the 37th consecutive session on Wednesday, its longest streak on record, according to data dating back to 1978.

“The SPX has been digesting its gains in a consolidation phase near its highs. Breakouts have outnumbered breakdowns in a reflection of healthy market breadth, or participation,” said Katie Stockton, chief technical strategist at BTIG, in a note.

The economic calendar was a thin one Thursday, with only two major reports on hand. Weekly jobless claims fell by 12,000 to 234,000, below a consensus estimate of 250,000. Wholesale trade data for December showed a 1 percent increase on inventories.

Meanwhile, St. Louis Federal Reserve President James Bullard said U.S. interest rates can remain low throughout at least 2017, with no clear sense yet of whether the new Trump
administration’s policies will touch off higher inflation or growth.

U.S. Treasurys fell Thursday ahead of a 30-year bonds sale, with the benchmark 10-year note yield rising to 2.386 percent and the short-term two-year note yield hovering around 1.17 percent. The 30-year bond yielded 3.015 percent.

Overseas, European equities traded broadly higher, but French yields hit a two-week low amid growing political risk as far-right presidential candidate Marine Le Pen gains more traction.

In an interview with The Economist, the head of sovereign ratings at Standard & Poor’s said Le Pen’s debt plan for France would trigger a default.

“Investors are looking at French bond and equity markets closely and we think, a rating cut could stimulate a serious tumult in this space. We would expect the CAC40 to sell if there is a rating cut and investors could favour the German equity market,” said Naeem Aslam, chief market strategist, in a note. He also said that Moody’s, another rating agency, could downgrade France’s debt.

Symbol
Name
Price
Change
%Change
DJIA Dow Industrials 20180.51
126.17 0.63%
S&P 500 S&P 500 Index 2308.01
13.34 0.58%
NASDAQ NASDAQ Composite 5718.47
36.02 0.63%

—Reuters contributed to this report.

On tap this week:

Thursday

Earnings: Agrium, Occidental Petroleum, Nissan, Borg Warner, Dunkin Brands, Expedia, News Corp, Nvidia, Pandora Media, Activision Blizzard, KKR

1:00 p.m. 30-year bond auction

1:10 p.m. Chicago Fed President Charles Evans

Friday

Earnings: Aon, Calpine, Buckeye Partners, ArcelorMittal, Ventas, Nippon Telegraph, Interpublic

8:30 a.m. Import prices

10:00 a.m. Consumer sentiment

2:00 p.m. Factory orders

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