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Stock Market News For Sep 28, 2017

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Benchmarks ended higher on Wednesday after financial stocks rallied. The Dow snapped its four successive days of losses. Moreover, the Russell 2000 index finished at a record. Meanwhile, the Trump administration revealed plans to reduce the tax rates substantially. Also, St. Louis Fed President James Bullard stated that the Fed should not be hasty about increasing interest rates.

The Dow Jones Industrial Average (DJIA) closed at 22,340.71, gaining 0.3%. The S&P 500 Index (INX) increased 0.4% to close at 2,507.04. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,453.26, increasing 1.2%. Advancing issues outnumbered decliners on the NYSE by 1.28-to-1 ratio.  On the Nasdaq, advancers outnumbered decliners by 2.93-to-1 ratio.  The CBOE VIX decreased 3.8% to close at 9.78.

Benchmarks Close Higher

Markets closed higher on Wednesday, with the three major benchmarks ending in the positive territory. The Dow gained 56.39 points to end its four day losing streak on Wednesday. Such gains were made possible due to a rally in the shares of Goldman Sachs (GS - Free Report) , which gained 2.1%. The companies possesses a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, the S&P 500 added 10.2 points to end in the green. The index hit an intraday record at 2,511.75, earlier in the session. Of the 11 major sectors of the S&P 500, seven ended in the positive territory, with financials leading the advancers. The Financial Select Sector SPDR ETF (XLF) gained 1.3% — its highest level in almost a decade on Wednesday, propelling the S&P 500 higher. Also, the Nasdaq Composite gained about 73 points to end in the green.

The Russell 2000 index surged 1.9%, adding almost 28 points to notch up yet another record close at 1,484.81. With this, the small-cap index posted its biggest one day percentage rise since Mar 1.

GOP Reveals the New Tax Code

Members of the Republican Party revealed comprehensive changes to the current tax code of the United States. In an announcement, Trump and his aides unveiled new reforms in tax policies which effectively lower taxes on businesses and individuals. However, the administration failed to explain how it planned to pay for such tax cuts.

The proposal seeks to decrease the corporate tax rate from 35% to 20%. Moreover, the pass-through business taxes — currently categorized under the individual tax code — would be slashed to 25%. Subsequently, the plan also revealed that the current seven personal tax slabs would be reduced to only three at 12%, 25% and 35%, respectively. The Trump administration also revealed that standard deduction would be doubled and child tax credit will be increased by a considerable amount.

This framework has been laid out by top Republicans from the House as well as the Senate. The team — famously called the ‘Big 6’ — include Treasury Secretary Steven Mnuchin and National Economic Director Gary Cohn among others.

Don’t be hasty with interest rates: James Bullard

While addressing the National Association for Business Economics meeting at Cleveland on Tuesday, Fed Chairwoman Janet Yellen cautioned against raising the interest rate gradually. She said that it would rather be ‘imprudent’ to wait till the inflation levels reach 2% to increase interest rates gradually as this might lead to labor market becoming overheated.

However, the St. Louis Fed President James Bullard stated on Wednesday that the U.S. economy would experience a slow growth with low rates of inflation for some time to come and therefore the Fed should keep the benchmark rates unchanged for some time. In fact, he added that there should be no more rate hikes through 2020.

Economic Data

Crude inventories decreased by 1.8 million barrels from the last week. Meanwhile, the durable orders for the month of August surged 1.7%, more than the consensus estimate of an increase of just 1%. Moreover, the pending home sales for August decreased 2.6%, whereas the consensus estimate was a decrease of only 0.5%.

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