Finance

Stocks Hit Record High As Trump Promises Tax Reform

| by Jordan Smith

Stocks hit record highs Feb. 9 following an announcement by President Donald Trump that business tax reforms would be unveiled in the coming weeks.

The president promised a "phenomenal" tax plan would be presented in the next "two or three weeks," Bloomberg reported.

Press Secretary Sean Spicer said the White House is working on the most comprehensive overhaul of personal and business taxes since 1986.

"Lowering the overall tax burden on American business is big league," Trump said, according to Reuters.

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His remarks sent the Dow Jones Industrial Average up 118 points, or 0.59 percent. It closed for the day at 20,172. The S&P 500 was up 0.58 percent to 2,307 and the Nasdaq Composite also climbed 0.58 percent to 5,715.

The best performing stocks Feb. 9 were financials, up 1.4 percent, and those in the energy sector, up 0.9 percent.

The S&P 500 has risen 7.9 percent since Trump was elected Nov. 8, 2016.

"Given the groups that responded and the enthusiasms within the market, it seems to be the tax comments that lit off the rally today," Bruce McCain, chief investment strategist at Key Private Bank, told Reuters.

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House Speaker Paul Ryan favors a plan that would cut corporate taxes to 20 percent and tax U.S. companies on domestic income and imports. In January, Trump's aides said the president was warming to the idea. But it remains unclear if he supports it in full.

"We're facing competition from abroad because of our tax code," added Spicer. "It favors companies not wanting to stay and the President recognizes that. The administration has been working with Congress on both business and individual taxes and wants to achieve a bipartisan approach."

There is disagreement on taxing imports.

"This 20 percent tax on all imports is regressive, hammers consumers and shuts down economic growth," Senator David Perdue of Georgia told Bloomberg.

Republican Senator Mike Rounds of South Dakota is also opposed.

"You're really talking about a major change in the United States in terms of who pays the bills," added Rounds. "Anytime we start talking about how we're going to regulate products going out and products coming in, we better darn well know what the impact on the economy is before we start making major changes."

Sources: Reuters, Bloomberg / Photo credit: Wikimedia Commons

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