Stocks race higher as Wall Street celebrates Senate tax vote
(CNN Money) — Wall Street is very, very happy that the Senate has passed a bill that would massively cut corporate taxes.
The Dow soared about 200 points to all-time highs on Tuesday morning following the Senate vote over the weekend. The S&P 500 also opened at a record high.
The burst of buying shows that Wall Street’s Michael Flynn freakout from Friday is over. The Dow had tumbled 350 points after an incorrect ABC News report about Flynn. But by Friday’s closing bell, the Dow was down just 42 points amid enthusiasm for renewed progress on the tax deal.
Investors love the tax overhaul because it could save companies tons of money on what they owe Uncle Sam. Both the House and Senate bills, which now have to be reconciled, call for slashing the corporate tax rate to 20% from 35%. They would also offer a tax break for companies to bring foreign profits sitting overseas back to the United States.
While Republican leaders promise the tax plan will unleash huge economic growth, spur hiring and lift wages, Wall Street and many economists are far less certain of such an outcome.
But investors can win, even if Main Street doesn’t. Markets are betting companies will use their spare cash to help Wall Street by ramping up stock repurchases and bolstering their dividends. Both moves could keep the stock market soaring, even if jobs and wages don’t take off as well. The Dow, up an incredible 6,000 points since President Trump’s election, smashed through the 24,000 level last week.
Wall Street also has some mega merger news to cheer. CVS unveiled a $69 billion agreement to acquire Aetna, which would transform the health care industry. 21st Century Fox and Disney have also resumed talks over a deal, The Wall Street Journal reported.