Although US stocks were mixed at the close of market day, Thursday, Dow continued its longest recorded streak since its first 13 trading days, in 1987. This, of course, was the year of the notorious October stock market crash, so traders often do not appreciate the mention of this year, but this time the trend is a bit more important. Indeed, the Dow was up 34 points, to close the day at 20,810. The S&P 500 also improved—about 2,363—but the Nasdaq fell roughly 25 points, to 5,835.
“We’re due for at least a rest, if not a correction. We’re way overbought,” comments Steve Massocca, who is the managing director at Wedbush Securities. Massocca goes on to say that the market will, of course, continue to focus this data, particularly since there is a substantial abundance of reports on the way; reports on everything from 4Q GDP to auto sales numbers to inflation. Of course, he notes, they will also focus on the next moves coming from Washington.
For example, President Donald Trump recently renewed confidence that a border-adjusted tax might be included in the new fiscal policy. On Thursday, he said, “I certainly support a form of tax on the border,” suggesting that this tax could, in fact create new jobs in the US. Still, Trump has also noted that any previous border-adjusted tax plans have been too complicated.
According to Wunderlich Securities chief market strategist, Art Hogan, comments, “Half of what the market is trading on is getting corporate tax rates down, in a nutshell. That would be bullish for earnings, and that’s unambiguous.”
Indeed, the new House plan follows that all imports coming into America will be subject to a border-adjusted tax. At the same time, the US will not charge tax on exports. Basically, this is intended to make it harder for foreign companies to sell their goods in the United States but will also encourage American companies to conduct business overseas.
Of course, by the end of Trump’s commenting, shares in the retail market fell, which is not surprising. Retailers, obviously, oppose this tax, as they remind that the consumers will suffer most from this—industrial companies favor it (because manufactured goods will perform better) but consumers will have to pay more, either way. As such, the tax is not expected to make through the Senate, and that is why, of course, it is crucial that Trump expresses his support for it.