Tax plan optimism propels Wall Street to record highs

As the Republican tax bill moved closer to being passed, optimism increased about the likelihood of lower corporate tax rates causing Wall Street to hit record closing highs on Monday.

The Nasdaq surpassed the 7,000-point mark during the session but closed below that level.

The Republican-controlled US Congress is expected to begin voting on sweeping tax legislation on Tuesday, aiming to get the bill to President Donald Trump to sign into law by the end of the week. Republican Senator Susan Collins said she would vote for the sweeping overhaul, all but ensuring its passage.

“This Congress has shown an inability to pass anything over the past five years,” said Michael O‘Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. “If a major piece of legislation is passed, you’d expect the markets to be happy.”

US stocks have enjoyed a near year-long rally, with the benchmark S&P 500 .SPX and the blue-chip Dow Jones Industrial Average .DJI set for their best year since 2013.

The bill would cut corporate tax rates to 21 percent from 35 percent, which investors are betting will boost profits as well as trigger share buybacks and higher dividend payouts.

Another expected outcome of lower taxes is cash repatriation, which market analysts say could boost mergers and acquisitions.

(REUTERS)