Wall Street higher as investors assess tax bill gains
Wall Street`s main indexes rose on Thursday as investors were hopeful that lower corporate tax rates would allow companies to spend additional capital on dividends, new projects and wages, which could give a boost to the overall economy.
The two chambers of the U.S. Congress approved a $1.5-trillion tax bill this week that would slash corporate tax rates to 21 percent from 35 percent.
A number of companies including AT&T , Wells Fargo and Boeing have promised higher pay for workers or more investment in training. Some others have forecast a rise in earnings due to tax cuts.
"The impact is still a work-in-progress, tax cuts are believed to add to earnings. But the unknowns are to what extent the company behaviour changes in terms of capex policy, buybacks and wage increases," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
At 12:29 p.m. ET (1729 GMT), the Dow Jones Industrial Average was up 100.33 points, or 0.41 percent, at 24,826.98 - within striking distance of the 25,000 mark.
The S&P 500 was up 9.66 points, or 0.36 percent, at 2,688.91, while the Nasdaq Composite was up 23.46 points, or 0.34 percent, at 6,984.41.
Financial and energy stocks led gains among the 11 major S&P sectors.
Wells Fargo jumped 2.44 percent, JPMorgan 1.5 percent and Goldman Sachs 2.3 percent, lifting the financial index 0.9 percent.
Adding to the upbeat sentiment, third-quarter GDP data showed the U.S. economy grew at its fastest pace in more than two years, powered by robust business spending.
A separate report showed a jump in the number of Americans filing for unemployment benefits last week, but the underlying trend in jobless claims remained consistent with a tightening labour market.
"You`ve got an improving economy that bodes well for loan growth along with a rising interest rate environment, and a modest regulatory relief, which makes financial stocks favourable," said Sandven.
The utilities sector, among sectors to benefit the least from tax cuts, fell 1.2 percent, its fourth day of decline in a row.
Accenture`s shares rose 4.4 percent to hit a record high of $158.40 after the consulting and outsourcing services provider reported strong quarterly profit, driven by digital and cloud services business.
Chevron shares jumped more than 3 percent to a record high of $124.69 after broker Cowen & Co raised price target on the stock by nearly a third to $160.
Advancing issues outnumbered decliners on the NYSE by 1,883 to 960. On the Nasdaq, 1,909 issues rose and 953 fell.