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Dow tops 24,000 as tax bill garners crucial support

(Reuters) – The Dow Jones Industrial Average broke the 24,000 mark for the first time on Thursday and other Wall Street indexes rallied on strong indications that President Donald Trump’s tax-cut plan may get enough support to pass.

Traders work on the floor of the New York Stock Exchange, (NYSE) as a screen displays the Dow Jones Industrial Average as it crosses 24,000, in New York, U.S., November 30, 2017. REUTERS/Brendan McDermid

Republican U.S. Senator John McCain said he would back the tax bill, adding it would boost the economy and provide tax relief for all Americans.

“McCain was also against the Obamacare legislation revision, and so his change of conviction on this issue represents an important swing vote,” said Mark Grant, managing director and chief strategist at Hilltop Securities.

The blue-chip Dow index has crossed four similar 1,000-point milestones this year on the back of strong corporate earnings, robust economic data and hopes that Trump’s tax plan would make headway.

“The market is beginning to price in a higher certainty of tax reform happening and that is the big driver today,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management in Horsham, Pennsylvania.

The market has priced in only a 20 percent to 40 percent probability of tax cuts, according to UBS strategists.

A reduction in corporate tax rate to 25 percent could boost S&P 500 earnings by 6.5 percent, UBS U.S. equity strategist Keith Parker estimated.

Art Cashin, Director of Floor Operations at UBS, wears a DOW 24,000 hat as he works on the floor of the New York Stock Exchange, (NYSE) as the Dow Jones Industrial Average crosses 24,000, in New York, U.S., November 30, 2017. REUTERS/Brendan McDermid

At 12:31 p.m. ET (1731 GMT), the Dow Jones Industrial Average .DJI was up 279.87 points, or 1.17 percent, at 24,220.55 and the S&P 500 .SPX was up 25.4 points, or 0.97 percent, at 2,651.47.

The Nasdaq Composite .IXIC rose 0.87 percent to 6,883.82, a day after posting its biggest one-day drop in more than three months as investors rotated out of technology stocks.

The S&P and the Dow were set to post eight straight months of gains, while the Nasdaq was on track to record five months of rises.

The S&P energy index .SPNY rose more than 1.3 percent after OPEC agreed to extend oil production cuts until the end of 2018.

Goldman Sachs (GS.N) jumped 3 percent, while JPMorgan (JPM.N) and Bank of America (BAC.N) rose more than 1.5 percent, tracking higher U.S. treasury yields.

Kroger (KR.N) was the biggest S&P gainer, surging about 10 percent after the supermarket chain forecast upbeat same-store sales for the holiday quarter and reported higher-than-expected results.

Data that pointed to sustained increase in underlying price pressures and a drop in first-time applications for unemployment benefits last week also helped sentiment.

Advancing issues outnumbered decliners on the NYSE by 1,916 to 947. On the Nasdaq, 1,686 issues rose and 1,171 fell.

Reporting by Sruthi Shankar and Rama Venkat Raman in Bengaluru; Editing by Sriraj Kalluvila

Our Standards:The Thomson Reuters Trust Principles.

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