Fundamental Analysis

Record Highs Hit By Dow S&P 500 As a Result of Tax Plan Update

Record Highs Hit By Dow S&P 500 As a Result of Tax Plan Update. Today stocks in the US have rallied with certain indexes hitting all-time highs as the weekend brought with it good news on the front of the Senate detailing how the US tax code system will be undergoing a severe overhaul. This move was somewhat expected, but not across the board hence why there was a lot of activity in the markets today.

Good progress has been shown when it comes to the Republican tax plan and investors are going to remain closely paying attention to any news that is released when it comes to the probe by the special counsel with regards to the election campaign of President Donald Trump.

It was on Saturday morning that the Senate managed to pass a tax reform proposal that was sponsored by the Republicans across the board, which has been hailed as a great victory for the President, one no doubt that was needed.

There have long been hopes since Trump first got elected that there would at some stage be an overhaul of the tax system that as business-friendly and it has been said to be a major contributor to the rising stock markets since he got into office.

The final steps for this bill are for the Senate and the House to agree on a single version before the final product will be sent to the president for him to sign into law.

It was forecast by the folks at JP Morgan that the S&P 500 would hit the 2800 milestone at some stage in early 2018, which would be an increase of 6%. There was also optimism acknowledged and cited by the team at Wells Fargo Investment as they also increased the target for their benchmark index because of optimism regarding the tax reforms.

It was on Friday that the markets had been somewhat rattled following the news about Flynn, a former member of Trump’s election team proceeded to plead guilty with regards to the charge of lying to federal investigators who had been undergoing investigations with regards to potential interference by Russia in the recent presidential election.

Another contributing factor was as a result of a report that was released by ABC which reported that Flynn was open to testifying that it was president Trump who had directed him to get into contact with the Russians.

Later on that day, however, ABC News made corrections to this report, saying that this contact was broached not when Trump was running for election but rather when he held the position of president-elect.

If there continues to be uncertainty in the political world related to these types of issues, this could see extended periods of volatility hitting the market, despite the fact that most investors are adamant that none of these issues can have an impact directly on the profits of corporations or the speed at which the economy is growing, which are the main fundamentals when it comes to equity markets.

It is a time to wait and see what happens next as the economy and the markets continue to strongly plough upwards.

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Andrew O'Malley

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