(Reuters) – U.S. stock indexes rose on Monday, lead by industrials, on optimism for further tax relief, although a drop in Apple kept gains in check.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., September 10, 2018. REUTERS/Lucas Jackson
Republicans in the U.S. House of Representatives plan to unveil another round of tax cuts this week, ahead of the Nov. 6 congressional elections.
Dubbed “Tax Reform 2.0”, the package is intended to augment Trump’s 2017 tax overhaul, which added $1.5 trillion to the federal deficit through permanent tax cuts for U.S. companies.
“Investors are definitely happy and they are reading into the potential of a future tax cut in the short term,” said Matt Watson, portfolio manager for James Advantage Funds in Alpha, Ohio.
Ten of the 11 major S&P sectors were higher, boosted by the trade-sensitive industrials sector which climbed 0.68 percent.
This despite Trump saying on Friday he was ready to levy additional taxes on practically all Chinese imports, threatening duties on $267 billion of goods over and above planned tariffs on $200 billion of Chinese products. China said it will respond if Washington takes any new steps on trade.
A number of companies said the proposed tariffs would weigh on business. Among them was, Apple which said a “wide range” of its products would be hit, although it did not mention the iPhone.
Bank of America Merrill Lynch estimated iPhone prices could go up by about 20 percent if they were assembled in the United States, instead of abroad.
Apple shares dropped 1 percent, giving up their premarket gains and weighing on the three major indexes.
At 11:47 a.m. ET the Dow Jones Industrial Average was down 6.31 points, or 0.02 percent, at 25,910.23, the S&P 500 was up 7.96 points, or 0.28 percent, at 2,879.64 and the Nasdaq Composite was up 19.92 points, or 0.25 percent, at 7,922.46.
The energy sector rose 0.39 percent as oil prices climbed after U.S. drilling stalled and investors anticipated lower supply once new U.S. sanctions against Iran’s crude exports kick in from November. [O/R]
Nike rose 2 percent, the most on the Dow, after a report said the footwear maker’s Labor day sales rose, easing concerns about the hit to demand after the Colin Kaepernick advertisement.
Insurers Travelers fell 1.9 percent and UnitedHealth dropped 2.7 percent, the most on the Dow, as forecasters said Hurricane Florence is “expected to become a major hurricane very soon” as it bore down on the U.S. East Coast.
Tesla rose 5.7 percent after brokerages Baird and Bernstein said the electric carmaker was on track to be profitable and cash flow positive in the second half of the year.
Alibaba dropped 3 percent after the company said Jack Ma will step down as chairman in one year, passing on the reins to trusted lieutenant, Chief Executive Officer Daniel Zhang.
Advancing issues outnumbered decliners for a 1.70-to-1 ratio on the NYSE and a 1.20-to-1 ratio on the Nasdaq.
The S&P index recorded 38 new 52-week highs and 5 new lows, while the Nasdaq recorded 80 new highs and 46 new lows.
Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta