U.S. equities and stock exchange traded funds continued to push to new heights as strengthening quarterly earnings and a highly anticipated announcement on U.S. tax policy help bolster markets.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were up 0.3% Wednesday.
Later Wednesday, President Donald Trump is anticipated to announce a proposal on corporate tax cuts, which many expect will include a reduced 15% business tax rate, reports Riva Gold for the Wall Street Journal.
“If there is a reduction in corporate taxes of this sort of magnitude, that would be very beneficial for financial markets, it’s a boost to corporate profitability,” Abi Oladimeji, chief investment officer at Thomas Miller Investment, told the WSJ. “But we still need to see actual policy implemented rather than proposed.”
Trump has made a number of promises during the campaign trail and since he was elected, helping U.S. markets experience one of their best rallies in recent years. However, many investors are waiting on clearer details as the Trump administration has faced some challenges in implementing substantial changes.
“We think you will see some type of corporate tax reform pass likely by end of this year, but it will be watered down…it’s hard to get legislation passed,” Holly MacDonald, chief investment strategist and portfolio manager at Bessemer Trust, told the WSJ.
U.S. markets found further support from solid quarterly earnings. For instance, Chipotle Mexican Grill (NYSE: CMG) strengthened after reporting its first increase in key sales metric in over a year.
However, keeping a lid on market gains, observers are concerned over a potential executive order that could end the North America Free Trade Agreement, or NAFTA. Traders are worried that the protectionist stance could harm global trade, Bloomberg reports.
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