Wall Street pares early losses to close higher
|- House GOP tax plan highlights a corporate tax reduction to 20% from 35%.
- President Trump nominates Jerome Powell as the next Fed chairman.
After starting the day slightly lower, major equity indexes in the U.S. recorded modest losses amid mixed market reaction to Republicans' tax bill draft.
Although the corporate tax cut to 20% fulfilled the investors' expectations, uncertainties over the legalization of the bill didn't allow for a positive reaction. “The message from the market is there are still a lot of unknowns out there. It’s kind of hard to draw too many conclusions at this point from what exactly the bill will end up being,” William Delwiche, investment strategist at Baird in Milwaukee, told Reuters.
Assessing the proposed tax plan, the National Association of Realtors President William Brown argued that the current form of the bill would put the middle-class homeowners and house values at risk as it nullifies the tax incentives for ownership. Pressured by these remarks, The Nasdaq Housing index (HGX ) closed the day 1% lower. In the meantime, a 2% loss in Facebook shares weighed on the S&P 500 Information Technology Sector (SPLRCT).
On Thursday, US President Donald Trump, as expected, announced that he nominated Jerome Powell as the next Chair of the Board of Governors of the Federal Reserve System nominee; however, the market reaction was non-existent.
The Dow Jones Industrial Average added 79.21 points, or 0.34%, to 23,514.22, the S&P 500 rose 0.39 points, or 0.02%, to 2,579.75 and the Nasdaq Composite closed virtually unchanged at 6,714.10 points.
DJIA technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, writes, "in the daily chart, the 20 DMA accelerated further higher below the current level, while the RSI extended its bounce from its 70 level, currently at 77. Shorter term, and according to the 4 hours chart, the index detached from a still flat 20 SMA, while technical indicators partially lost bullish strength after nearing overbought levels, favoring the upside anyway."
According to the analyst, supports for the index could be seen at 23,459, 23,405, and 23,355 while resistances align at 23,529, 23,560, and 23,600.
Headlines from the NA session
- Market wrap: Republican tax reform plan released, DXY down - 0.1% - Westpac
- Fed: Powell’s nomination does not change outlook for monetary policy - Wells Fargo
- What does Powell mean for markets? - ING
- Fed's Powell: Have seen substantial progress in economic recovery
- US Pres. Trump: Powell understands what it takes to make economy grow
- Fitch: UK rate rise has little growth impact, shows global shift
- U.S. House tax chief: Tax bill will be revised to bring deficit to within $1.5 tln ceiling
- US: Rising productivity mirrors recent GDP gains - Wells Fargo
- ISM NY: Current Business Conditions came in at 51.6 in Oct, up from 49.7 in Sep
- US: Weekly initial claims was 229,000, a decrease of 5,000 from previous week
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