Stocks hold steady ahead of tax-plan announcement
Stock markets around the world made only modest moves on Wednesday, waiting to see what the White House has in store for US tax policy.
Stocks have sprinted higher since November, due in large part to expectations that lower taxes and looser regulations for businesses are on the way. Officials have described it as "the biggest tax cut" in US history, though the announcement is likely to include only broad outlines and few details.
The Standard & Poor's (S&P) 500 index rose 3 points, or 0.1 per cent, to 2,392, as of 10:40 a.m. eastern time. It follows two days of strong gains of more than 0.6 per cent, and the index is close to its record closing level of 2,395.96, set at the start of March.
The Dow Jones industrial average rose 23 points, or 0.1 per cent, to 21,019, and the Nasdaq slipped 1, or less than 0.1 percent, to 6,024.
Along with expectations for lighter regulations on business, hopes for lower taxes have been among the main drivers for the 11 per cent sprint higher for the S&P 500 since election day.
The White House is expected to announce plans to cut the corporate tax rate to 15 per cent from 35 per cent. That may be only a starting point for negotiations, but a tax rate even in the 25 per cent range would mean fatter after-tax profits for companies, which could propel their stock prices even further.
Many investors say profits need to climb to justify the big gains that stock prices have made in recent years.
This is a frenetic week for companies reporting how much they earned during the first three months of the year. More than a third of the businesses in the S&P 500 are slated to go this week.
Reports have been largely better than expected, and analysts expect this to be the strongest quarter of growth in years.
Edwards Lifesciences jumped to the biggest gain in the S&P 500 Wednesday after it reported stronger revenue and profit for the latest quarter than analysts expected. The company also raised its profit forecast for the year. Its stock jumped $9.79, or 9.9 per cent, to $108.71.
That helped drive health care to the second-biggest gain among the 11
sectors that make up the S&P 500 index, 0.8 per cent.
Wynn Resorts jumped $7.22, or 6.1 per cent, to $125.44 after reporting revenue and profits that topped expectations. The company saw stronger revenue from its Las Vegas casino, as well as its new Macau resort, which opened in August.
US Steel plunged $7.72, or 24.8 per cent, to $23.39 after it reported a loss for the first quarter and cut its profit forecast for the year.
In Europe, the French CAC 40 rose 0.2 per cent, the FTSE 100 in London added 0.1 per cent and the German DAX rose 0.1 per cent.
Benchmark US crude oil rose 27 cents to $49.83 a barrel. Brent crude, which is used to price international oils, rose 15 cents to $52.72 per barrel in London.
The euro slipped to $1.0887 from $1.0939 late Tuesday, while the dollar rose to 111.48 Japanese yen from •111.09. The British pound rose to $1.2850 from $1.2830.
US government bond prices rose. The yield on the 10-year Treasury note slipped to 2.32 per cent from 2.34 per cent late Tuesday.