Bloomberg: US stocks shot to new highs after Republican leaders said they’ll release the final version of the tax overhaul bill Friday evening. The dollar gained as investors assessed messages from the Federal Reserve and European Central Bank meetings this week.
The major equity gauges spiked higher earlier in the session, after fence-sitting Senator Marco Rubio said he’d support the plan, and kept climbing. The S&P 500 Index, Dow Jones Industrial Average, Nasdaq 100 Stock Index and Nasdaq Composite Index all set fresh records. The small-cap Russell 2000 Index, whose domestically focused members stand to benefit most from tax cuts, added nearly 2 per cent. Equities slumped Thursday when Rubio indicated he wouldn’t support the bill in its current form.
Uncertainty surrounding the fate of US tax reform has had investors on edge as they look to the end of a stellar year for equities. Money managers have shown signs of dialling back their appetite to take risk amid signals that the eight-year stock rally may not be far from its end.
“We’ve got investors heading into year-end trying to figure out where they need to make adjustments in their portfolios with the new tax codes coming into effect and also in general we’re seeing global markets continuing their recovery,” said Chris Gaffney, president of EverBank World Markets in St. Louis.
Aside from the back-and-forth on tax negotiations, a quarterly event known as quadruple witching, when futures and options contracts on indexes and individual shares expire, also added to volatility in the stock market.
Treasuries fluctuated. Gold climbed with crude, which continued to trade above $57 a barrel. The Stoxx Europe 600 Index was lower with retailers leading the decline as Hennes & Mauritz AB plunged after reporting a slump in quarterly sales. South Africa’s rand gained even as volatility soared before the ruling African National Congress meets this weekend to elect a new leader.
The euro turned lower as the ECB remained cautious about the prospects of reaching its inflation goals while reiterating a pledge to keep stimulus in place. The pound dropped and yields on UK gilts fell to the lowest since September amid speculation Brexit talks are about to get more difficult. Russia’s ruble fluctuated after the nation’s central bank cut rates more than expected.
