Optimism About Trump Tax Plan Lifts Stocks To Record Highs - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Thursday after showing a lack of direction in the past few sessions. With the upward move on the day, the major averages reached new record closing highs.

The major averages closed firmly in positive territory but off their best levels of the day. The Dow advanced 118.06 points or 0.6 percent to 20,172.40, the Nasdaq climbed 32.73 points or 0.6 percent to 5,715.18 and the S&P 500 rose 13.20 points or 0.6 percent to 2,307.87.

The strength on Wall Street was partly due to comments from President Donald Trump, who pledged to announce a plan to lower the tax burden on American business in the next few weeks.

"That's coming along very well. We're way ahead of schedule, I believe," Trump said at a meeting with airline executives. "We're going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax."

Trump has previously proposed reducing the corporate income tax rate to 15 or 20 percent from the current rate of 35 percent.

Positive sentiment may also have been generated by a report from the Labor Department showing an unexpected decrease in initial jobless claims in the week ended February 4th.

The report said initial jobless claims dropped to 234,000, a decrease of 12,000 from the previous week's unrevised level of 246,000. Economists had expected jobless claims to edge up to 250,000.

With the unexpected decrease, jobless claims fell to their lowest level since hitting a more than forty-year low of 233,000 in the week ended November 12th.

A separate report from the Commerce Department showed that wholesale inventories increased in line with estimates in December amid a jump in petroleum inventories.

Among individual stocks, shares of World Wrestling Entertainment (WWE) moved sharply higher after the company reported fourth quarter results that exceeded analyst estimates.

Doughnut shop operator Dunkin Brands (DNKN) also posted a strong gain after reporting better than expected fourth quarter earnings and revenues.

On the other hand, shares of Twitter (TWTR) came under pressure after the social media giant reported better than expected fourth quarter earnings but forecast weaker than expected first quarter earnings.

Sector News

Airline stocks saw substantial strength on the day as Trump met with industry executives, with the NYSE Arca Airline Index jumping by 2.3 percent. The index climbed further off the two-month closing low it set on Tuesday.

SkyWest (SKYW) posted a standout gain after raising its quarterly dividend to $0.08 per share and announcing a $100 million share repurchase program.

Considerable strength was also visible among computer hardware stocks, as reflected by the 2.3 percent gain posted by the NYSE Arca Computer Hardware Index. With the gain, the index reached a record closing high.

Supercomputer manufacturer Cray (CRAY) led the hardware sector higher after reporting better than expected fourth quarter results.

Steel, natural gas, financial, and biotechnology stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

On the other hand, gold stocks bucked the uptrend, with the NYSE Arca Gold Bugs Index slumping by 2.5 percent after ending the previous session at a four-month closing high.

The pullback by gold stocks came amid a decrease by the price of the precious metal, as gold for April delivery fell $2.70 to $1,236.80 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, but the Japanese markets bucked the uptrend. Japan's Nikkei 225 Index fell by 0.5 percent, while China's Shanghai Composite Index climbed by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index jumped by 1.3 percent, the German DAX Index advanced by 0.9 percent and the U.K.'s FTSE 100 Index rose by 0.6 percent.

In the bond market, treasuries gave back some ground after trending higher in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.4 basis points to 2.395 percent.

Looking Ahead

Following several relatively quiet days on the U.S. economic front, trading on Friday may be impacted by reaction to reports in import and export prices and consumer sentiment.

On the earnings front, Activision Blizzard (AVTI), Expedia (EXPE), News Corp. (NWSA), Western Union (WU) and Yelp (YELP) are among the companies releasing their quarterly results after the close of today's trading.