The U.S. stock markets have rallied for months and are trading at all-time highs in anticipation of lower taxes for businesses. The benchmark Dow Jones Industrial Average Index .DJI closed up 0.42 percent at 24624.8, hitting the record high.
For US 30 on Wednesday, the biggest gainers of the session were Caterpillar Inc (NYSE: CAT), which rose 3.59 percent or 5.15 points to close at 148.57. Nike Inc (NYSE: NKE) gained 3.43 percent or 2.13 points to end at 64.30 and Coca-Cola Company (NYSE: KO) was up 1.35 percent or 0.61 points to 45.90 in late trade.
However, the biggest losers included International Business Machines (NYSE: IBM), lost 1.81 percent or 2.83 points to end at 153.91, while American Express Company (NYSE: AXP) declined 1.60 percent or 1.59 points to 97.78 and JPMorgan Chase & Co (NYSE: JPM) shed 1.25 percent or 1.34 points to close at 105.51.
Congressional Republicans reached a deal on final tax legislation on Wednesday, clearing the way for final votes next week on a package that reduce the corporate tax rate from 35 percent to 21 percent, one percentage point higher than the earlier proposed, which is a deep tax reduction that corporations have sought for years.
As they started finalizing the biggest tax overhaul in 30 years, policy makers wavered for weeks on whether to slash the top income tax rate for the wealthy. Finally, they reached consensus on cutting it to 37 percent from the current 39.6 percent, even though there was criticism from Democrats that the Republican plan tilts toward the rich and corporations, offering little to the middle class.
As drafted, the Republican plan was expected to add as much as $1.5 trillion to $20 trillion national debt in 10 years. With that in view, Republicans have been urgently trying to finalize details of their package without increasing its estimated impact on the federal deficit and the debt.
At a tax event held by Democrats, Moody’s Analytics Chief Economist Mark Zandi said the Republican bill, if enacted, would cause interest rates to rise, meaning the benefits of a lower corporate tax rate would be “completely washed out.” Hence, The long term influence on stock markets are still non-known, while the market is looking good over the near future.
Federal Reserve officials followed through on an expected interest-rate increase to 1.50 percent, 25 basis points higher, and raised their forecast for economic growth in 2018, even as they stuck with a projection for three hikes in the coming year.
“This change highlights that the committee expects the labor market to remain strong, with sustained job creation, ample opportunities for workers and rising wages,” Chair Janet Yellen told reporters Wednesday in Washington following the decision. In her final scheduled press conference, Yellen noted that her nominated successor, Jerome Powell, has been part of the consensus shaping the Fed’s gradual rate-hike strategy.
Underlying U.S. consumer inflation (2.2 percent) slowed in November, held down by weak healthcare costs and the biggest drop in apparel prices in nearly two decades, which could impact the pace at which the Federal Reserve raises interest rates next year.
The lack of a sustained pickup in core CPI does make the Fed deliberations about the pace of monetary policy tightening next year more complicated.
The Dow Jones Industrial Average Index rallied for a fifth straight day to the record high, which is quite hard to predict when it will reverse technically. Even so, we are trying to use “Bulls” in attempt to predict when to sell. As depicted below, there is a potential reversal signal at this moment, with the oscillator turning downwards and its value at the analysed bar is above 0.
Chart 1: US30 Daily
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