- Dow reaches intra-day record highs.
- Nasdaq drops as technology stocks underperform.
- S&P 500 pares early gains to close in the red.
Major equity indexes closed the day on a mixed-note on Monday as investors assessed the potential impact of the tax bill on different sectors.
Financial shares rose sharply as banks are seen benefiting from the proposed tax cuts. Moreover, tax cuts are likely to ramp up the economic activity, which could force the Federal Reserve to tighten the monetary policy at a faster pace than markets are anticipating. Once again, the S&P 500 Financials Sector (SPSY) became the best performing sub-index on the day as it added 1.55%.
Commenting on today's market action, “the big story is indeed the tax reform passage. Until fairly recently, markets were pretty skeptical about whether anything was actually going to happen. This can have a meaningful impact on corporate earnings here in the U.S. So you are largely seeing a repricing of the U.S. markets based on that,” Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, told Reuters.
In the meantime, as investors' focus shifted to other sectors, the S&P 500 Information Technology Sector (SPLRCT) became the biggest loser of the day by dropping nearly 2%. On the other hand, despite a sharp fall witnessed in oil prices, the S&P 500 Energy Sector (SPNY) closed the day virtually unchanged as producers in the U.S. are thought to boost their output in order to take advantage of rising oil prices following OPEC's decision to extend the output cut deal until the end of 2018.
Both the Dow Jones Industrial Average and the S&P 500 indexes renewed their all-time highs during the first half of the session before losing their momentum. Nevertheless, the DJIA finished the day 58.96 points, or 0.24%, higher at 24,290.55. The broader S&P 500 lost 2.78 points, or 0.11%, to close the day at 2,639.44. Finally, the tech-heavy Nasdaq Composite dropped 72.13 points, or 1.05%, to 6,775.46.
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