U.S. equities charged higher, led by small-cap issues, after President Donald Trump’s tax cut plan was finally unveiled. The plan — well more like an outline or a blueprint to get the Congress started — featured ideas that had already been teased, including cutting the corporate tax rate to 20% (vs. 35% now), immediate expensing of capital investments, and cutting the top pass-through rate to 25% from nearly 40%.
Some simplification of the tax code was included as well, with a doubling of the standard deduction and a reduction of the number of tax brackets.
In the end, the Dow Jones Industrial Average gained 0.3%, the S&P 500 gained 0.4%, the Nasdaq Composite gained 1.2% and the Russell 2000 ended the day higher by 1.9%. Treasury bonds came under pressure, the dollar was stronger, gold fell 1.1% and oil gained 0.5% in choppy trading.
Breadth was positive with advancers outpacing decliners 1.3 to 1 while volume clocked in at 98% of the NYSE’s 30-day average. Financials led the way with a 1.3% gain while utilities were the laggards, down 1.2%.
Micron Technology, Inc. (NASDAQ:MU) gained 8.5% on solid quarterly results and forward guidance thanks to a tight memory market and higher prices. 4K camera maker Ambarella Inc (NASDAQ:AMBA) gained 6.5% on positive comments from Morgan Stanley regarding opportunities in computer vision technology. Twitter Inc (NYSE:TWTR) gained 2.2% after the company confirmed it was testing a higher character limit.
On the downside, Trivago NV – ADR (NASDAQ:TRVG) fell. 2.1% after suffering a downgrade from JPMorgan on worries shares could remain rangebound as the company works through bidding adjustments from large advertisers. Nike Inc (NYSE:NKE) fell 1.9% after reporting big quarterly earnings on better expense control. But management lowered forward guidance amid ongoing promotional activity in the United States.
On the economic front, durable goods orders came in largely as expected with headline orders rising 1.7% vs. the 1% expected.
Conclusion
Click to Enlarge The rip higher in the Russell 2000 over the past month is breathtaking in its ferocity with today marking the best one-day gain since Election Day. I could talk about breadth being unimpressive. About how key large-caps like General Electric Company (NYSE:GE) are being left behind.
Or how the CBOE Volatility Index (INDEXCBOE:VIX) has formed a positive divergence over the last few weeks forming a pattern of higher lows. Or how long-term interest rates are poised to creep higher and weigh on economic growth.
None of that seems to matter as sentiment burns white hot; made even more impressive by the horrible seasonality stocks normally suffer from in September and October.
Check out Serge Berger’s Trade of the Day for Sept. 28.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
Tell us what you think about this article! Drop us an email at editor@investorplace.com, chat with us on Twitter at @InvestorPlace or comment on the post on Facebook. Read more about our comments policy here.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
