Russell 2000 hits record on tax optimism

Russell 2000 hits record on tax optimism

The Dow and S&P 500 have reached new record intraday highs, while the Nasdaq has pulled back into negative territory.

Wall Street traders are poised for a share price surge leading to United States indices hitting record levels as businesses are buoyed by the tax cuts in President Donald Trump's long-awaited reform bill, which was passed over the weekend.

The Senate voted 51 to 49 in favor of the bill known as the Tax Cuts and Jobs Act, with the vote largely coming down along party lines. But stocks rallied into Friday's close on signs lawmakers had the votes to pass their tax measure and markets looked set to continue that positive tone on Monday. Thus far this year, the Russell is up 14.5%, below the almost 19% rise of the S&P 500, the 24% gain of the Dow Jones Industrial Average and the Nasdaq Composite Index's 27% gain. It is seen as a key victory for relatively new U.S. president Donald Trump.

On the US economic front, the Commerce Department released a report showing a modest decrease in new orders for manufactured goods in the month of October.

Elsewhere in Europe, the British pound rose 0.2% against the dollar and 0.6% against the euro amid reports that Britain and the European Union are nearing an agreement that would allow Brexit negotiations to move forward. Economists had expected orders to drop by 0.4 percent.

The S&P 500 has risen about 18 percent this year on strong corporate earnings and solid economic growth as well as on the hope that Trump's agenda of corporate tax cuts and looser regulations could come through. The equity was up roughly 164% year-to-date coming into today, and hit a record high of $65.97 on October 31.

Bank and industrial stocks are some of the early gainers.

Going the other way though was the tech heavy Nasdaq, which shed 3.74 points at 6,843.

Meanwhile, the major European markets all moved to the upside on the day.

The Senate passed sweeping revisions to the USA tax code past midnight Saturday after Republicans overcame internal divisions to pave the way for $1.4 trillion in tax cuts that would lower the corporate rate from 35% to 20%.

Jeremy Siegel, a highly respected financial professor who has correctly predicted many previous market milestones, told the U.S. media that the Dow Jones could hit 25,000 in a matter of weeks, if not days, on the back of momentum from the bill.

U.S. Treasury prices are lower this morning, sending the benchmark 10-year yield up 3 bps at 2.39% and the two-year yield also 3 bps higher at 1.80%.

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