Wall Street opens higher as Trump's tax plan awaited

The Dow Jones Industrial Average rose 63.25 points, or 0.28 per cent, to 22,347.57. The S&P 500 gained 8.24 points, or 0.33 per cent, to 2,505.08. PHOTO: AFP

NEW YORK (REUTERS) - US 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 per cent corporate income tax rate, a new 25 per cent tax rate for pass-through businesses including partnerships and a reduced 35 per cent 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 per cent gain in the financial index. Shares of big banks, including Bank of America and Goldman Sachs, were up about 2 per cent on rising bets of a third interest rate hike this year following Federal Reserve Chair Janet Yellen's comments on Tuesday.

Ms 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 per cent chance of a December rate hike, compared with 71.4 per cent a week ago, according to CME Group's FedWatch tool.

At 10:41 a.m. ET (10:41 p.m. Singapore time), the Dow Jones Industrial Average was up 14.21 points, or 0.06 per cent, at 22,298.53, the S&P 500 was up 2.58 points, or 0.10 per cent, at 2,499.42 and the Nasdaq Composite was up 31.95 points, or 0.5 per cent, at 6,412.11.

Data from Commerce Department showed new orders for key US-made capital goods increased more than expected in August and shipments maintained their upward trend, pointing to underlying strength in the economy.

Declining issues outnumbered advancers on the NYSE by 1,456 to 1,271. On the Nasdaq, 1,757 issues rose and 896 fell.

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