Benchmarks closed at record highs on Tuesday after the Senate advanced the Republican Tax Bill. This is seen as a major stride toward implementation of tax reforms. Further, Jerome Powell’s comments that he would follow Yellen’s path in terms of monetary policies also boosted investor sentiment. After a hiatus of two months, North Korea tested yet another missile on Tuesday. Such an event weighed on investor sentiment and partly pared gains for the markets. Lastly, Consumer Confidence hit a 17 year high, driven upward by a broadly encouraging U.S. economy.
The Dow Jones Industrial Average (DJIA) increased 1.1%, to close at 23,836.71. The S&P 500 Index (INX) gained 1% to close at 2,627.04. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,912.36, increasing 0.5%. Advancers outnumbered decliners on the NYSE by 1,784 to 1,045. On Nasdaq, advancing issues outnumbered declining ones by 1,750 to 1,098. The CBOE VIX decreased 0.5% to close at 9.92.
Senate Votes for Republican Tax Bill
In a 12-11 vote on Tuesday, the Senate Budget Committee advanced the Tax Bill proposed by the members of the GOP. Senators Bob Corker and Ron Johnson also voted in favor of the Bill. Interestingly, both the Republicans had earlier been skeptical about the success of such a tax reform framework, objecting openly to the most important facet of the Bill which seeks to reduce the corporate tax rate from 35% to 20%.
Economists are estimating that a full Senate vote could be reached by Thursday. Such a development takes President Trump a step closer toward pushing through tax reforms. This development also boosted investor sentiment.
North Korea Launches another Missile
Just when geopolitical tensions between Washington and Pyongyang seemed to have ebbed, Kim Jong-Un’s regime tested another Intercontinental Ballistic Missile (ICBM) on Tuesday. This test comes after a hiatus of two months. The launch was confirmed by Yonhap News Agency from South Korea. Per the report from the news agency, North Korea launched a missile around 3 AM local time (1:30 PM EST), which travelled around 620 miles before landing in the waters between Korean Peninsula and Japan.
In retaliation, South Korea also fired missiles into its surrounding waters in order to let North Korea know that it can also be ‘taken under fire.’ In an interview with Fox News, Pentagon Spokesperson Robert Manning III, commented that the latest missile launch by Pyongyang did not pose any threat to “North America, our territories or our allies.”
How Did the Benchmarks Perform?
The Dow amassed almost 256 points to finish at a record high, buoyed by gains notched up by JP Morgan (JPM), shares of which surged 3.5%. Moreover, progress on the tax Bill also boosted markets. Further, Jerome Powell, selected by Trump for the post of Fed Chief, commented that he would choose not to deviate from the path that Fed’s current Chief Janet Yellen has laid out.
Powell mentioned that he would continue to work toward raising interest rates at the same time as gradually unwinding the Fed’s humungous balance sheet. Such comments from Powell boosted financial stocks, with the sector posting its best performance since Mar 1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Financial Select Sector SPDR ETF (XLF) and SPDR S&P Bank exchange-traded fund (KBE) surged 2.6% and 3.2%, respectively. Moreover, the S&P 500 gained 25.6 points, gains for which was boosted primarily by financial stocks. Of the 11 major segments of the S&P 500, 10 ended in positive territory. Finally, the Nasdaq gained 33.8 points to end in the green.
Consumer Confidence Hits a 17-Year High
Consumer Confidence for November came in at 129.5, surpassing the previous month’s reading of 126.2. The consensus estimate for the period was 123.9. This is its highest level since November 2000. Economists believe that such a reading was achieved under broadly encouraging economic conditions.
U.S. economy is at full throttle, with GDP hitting 3% growth in two consecutive quarters. Lastly, what also spiked consumer confidence was the fact that unemployment in the United States is at a 17 year low.
Stocks That Made Headlines
Tiffany Q3 Earnings & Sales Top Estimates, View Intact
Tiffany & Co. TIF posted sixth straight quarter of positive earnings surprise, when it reported third-quarter fiscal 2017 results. (Read More)
Shell Resumes Full-Cash Dividend Payment on Oil Revival
Shares of European oil giant Royal Dutch Shell plc RDS.A rose yesterday after the company announced plans to resume full-cash dividend payouts and share repurchase program. (Read More)
ExxonMobil's Hebron Project Comes Online Ahead of Schedule
ExxonMobil Corporation XOM has commenced production in the Hebron project ahead of schedule. (Read More)
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