Dow, S&P 500, Nasdaq end at records as US tax cut plan advances

Wall Street's three major indexes tallied record closing highs as hopes rose for the Republican tax bill to pass.
A trader works on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange.
A trader works on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange.PHOTO: AFP

NEW YORK (AFP) - Wall Street stocks surged to fresh records on Friday (Dec 15) as key congressional holdouts on a US tax cut proposal signalled their support, pushing the long-awaited measure closer to the finish line.

All three major US indices finished at records, with the Dow Jones Industrial Average rising 0.6 per cent to 24,651.74.

The broad-based S&P 500 gained 0.9 per cent to 2,675.81, while the tech-rich Nasdaq Composite Index jumped 1.2 per cent to 6,936.58.

The records marked a sharp reversal from Thursday, when stocks retreated on reports that Republican Senator Marco Rubio threatened to oppose the measure.

But party power brokers tweaked the proposal to satisfy Rubio’s demand that it benefit more middle- and low-income taxpayers.

Republican Senator Bob Corker, who opposed an earlier version of the proposal, also said he would support the final measure.

“As the progress continues, this is a market that continues to reward that progress,” said Art Hogan, chief market strategist at Wunderlich Securities.

“This feels like there’s a lot of enthusiasm about tax reform getting to the endzone.”

Since President Donald Trump was elected last year, Wall Street has viewed tax reform as Washington’s biggest priority because it would immediately boost corporate profits and was seen as a means to generate faster economic growth.

The Bill has progressed in Congress without support from Democrats and some polls have shown weak public support for the measure, in part because of charges that it is a giveaway to the rich that could explode the deficit.

Gains on Friday were fairly broad-based. Intel was the biggest winner on the Dow, tacking on 3 per cent. Other blue-chip companies with bigger-than-average gains included Microsoft, Pfizer and United Technologies.

Costco Wholesale jumped 3.3 per cent after reporting that earnings for the quarter ending Nov 26 rose 17.4 per cent to US$640 million (S$860 million) behind a 10.5 per cent rise in comparable sales.

Freight railroad company CSX tumbled 7.6 per cent as it announced that chief executive E. Hunter Harrison was on medical leave due to “unexpected complications from a recent illness.” The board named chief operating officer James Foote as acting chief executive.