Tuesday, 14 August, 2018

Dow Reaches Record Closing High But Nasdaq Tumbles

American flag hangs on the front of the New York Stock Exchange on an evening in New York. World stock markets mostly fell Tuesday Dec. 5 2017 as investors digested the possible impact of the U.S Dow Reaches Record Closing High But Nasdaq Tumbles
Sherri Watson | 05 December, 2017, 03:21

The S&P 500 and the Dow rose to record highs on Monday, led by gains in bank stocks, after Republican-led efforts to slash corporate tax rates cleared a major hurdle.

Traders work on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., December 1, 2017. A rotation out of chip and other technology names first started last week when the Nasdaq plunged 1.3% in higher volume Wednesday.

The House, which passed its own tax bill in November, and Senate must now produce a combined measure before sending it to President Donald Trump to signed into law.

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.

"It will likely result in increased dividends and share repurchases, and that makes valuations more reasonable and should prolong the rally", said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

"With the great vote on Cutting Taxes, this could be a big day for the Stock Market - and YOU!"

"People are rotating into consumer discretionary and away from technology because of tax advantages from the new bill", said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio, Texas.

The Dow rose as gains in shares of Walt Disney and those of Boeing, recently up 4.9 percent and 2.7 percent respectively, outweighed declines in shares of Microsoft and those of Visa, recently down 2.8 percent and 2.7 percent respectively.

Significant strength was also visible among banking stocks, as reflected by the 2.2% gain posted by the Dow Jones Banks Index. Indexes initially jumped on expectations that lower tax rates would help corporate profits pile up even higher, and the S&P 500 was up as much as 0.9 percent in morning trading.

On the currency front, the USA dollar is trading at 112.90 yen compared to the 112.17 yen it fetched at the close of NY trading on Friday. The Dow Jones industrial average gained 58 points, or 0.2 percent, to 24,290. Earlier in the session, the S&P 500 had touched a record high.

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 Japanese yen weakened 0.58 percent versus the greenback at 112.78 per dollar.

The report said factory orders edged down by 0.1% in October after surging up by 1.7% in September. Shares of Aetna slipped, trading 0.6 percent at US$180.19 in 12.54pm trading in NY, while those of CVS traded 4.9 percent weaker. Aetna shares were down marginally.

The FANG group of Facebook Inc (NASDAQ:)., Amazon.com Inc (NASDAQ:)., Netflix Inc (NASDAQ:). and Google parent Alphabet (NASDAQ:) Inc. closed more than 1% lower.