After Senate Hands Trump’s Tax Reform a Win, Stock Market Closes at Record High
After the Senate passed a $4 trillion budget Thursday that paves the way for President Donald Trump’s tax reform plan, the stock market closed at all-time highs Friday.
According to USA Today, the Senate voted 51-49 to approve the budget for fiscal 2018, with Kentucky Republican Sen. Rand Paul joining Democrats in opposing the measure.
On Friday, the Dow Jones Industrial Average, Nasdaq and S&P 500 closed at record highs amid hopes that Trump’s plan for tax cuts might now make further headway in the Senate, Fox Business reported.
The Dow Jones Industrial Average gained 165 points to close at 23,328.63. The S&P 500 climbed 13 points, finishing at 2,575.21. The Nasdaq rose 24 points, closing at 6,629.05.
All three major indices posted new records, with the Dow experiencing its best week in more than a month. Notching 52 record closes since the beginning of the year, the Dow extended its third-longest bull market in history.
Investors are keeping a sharp eye on developments in Washington, D.C., anticipating tax cuts for large and small businesses, as well as individual earners.
However, Jamie Cox, managing partner at Harris Financial Group, said that the ebullient performances of the major indices do not necessarily reflect the belief that tax reform is imminent. Cox said a lower tax rate is not essential for market growth since corporations are already reporting strong earnings.
“I don’t think tax reform is in the market, because it hasn’t happened yet,” Cox said in a recent interview, noting that tax cuts will spark economic growth. “A lot of times, tax cuts come when the economy needs a jolt. That’s not the case here.”
To Cox’s point, financial and industrial stocks contributed to Friday’s record highs.
An impressive comeback in General Electric shares from a 6 percent deficit to positive also helped raise benchmarks in the market, according to CNBC.
Also propelling Friday’s rally was PayPal stock, which was among the best-performing stocks in the S&P 500, climbing 5.5 percent after the company reported better-than-expected quarterly results. Microsoft also performed well.
Fueled by growth in corporate earnings and positive views on the U.S. economy, the bull market is enjoying a long run.
Image and Content: Western Journalism