Wall St. pares gains after Trump outlines tax plan
Wall St. U.S. stocks pared gains on Wednesday after President Donald Trump’s administration called for slashing tax rates but offered few details about how to pay for tax cuts without expanding the federal deficit.
The plan proposed a 20 percent corporate income tax rate, a new 25 percent tax rate for pass-through businesses including partnerships and a reduced 35 percent top income tax rate for individual Americans, according to a framework seen by Reuters.
If passed, the plan would be Trump’s first significant legislative win since taking office in January.
“Unveiling the plan is one thing, and getting it passed is another,” said Victor Jones, director of trading at TD Ameritrade.
“While I think there is optimism, time will tell us how much of an impact that will have on the market … Investors are going to look for whether or not this plan will get any bipartisan support or at least full support of the Republican party.”
Six of the 11 major S&P indexes were higher, led by a 1.17 percent gain in the financial index (SPSY).
Shares of big banks, including Bank of America (N:BAC) and Goldman Sachs (N:GS), were up about 2 percent on rising bets of a third interest rate hike this year following Federal Reserve Chair Janet Yellen’s comments on Tuesday.
Yellen said it would be “imprudent” to keep rates on hold until U.S. inflation hit the 2 percent target.
Traders now see an 81.4 percent chance of a December rate hike, compared with 71.4 percent a week ago, according to CME Group’s FedWatch tool.
At 10:41 a.m. ET (1441 GMT), the Dow Jones Industrial Average (DJI) was up 14.21 points, or 0.06 percent, at 22,298.53, the S&P 500 (SPX) was up 2.58 points, or 0.10 percent, at 2,499.42 and the Nasdaq Composite (IXIC) was up 31.95 points, or 0.5 percent, at 6,412.11.
A 0.78 percent rise in Apple’s (O:AAPL) shares was the biggest boost to the S&P and the Nasdaq, while Goldman Sachs propped up the Dow.
Nike (N:NKE) slipped about 3.7 percent and was the biggest drag on the Dow, after the company posted its slowest quarterly sales growth in nearly seven years and said it expected a further drop in revenue from North America.
Micron Technology (O:MU) rose 8 percent after the company reported a better-than-expected profit and forecast results above estimates.