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Markets closed higher on Thursday after the House finally passed the much awaited tax legislation as the Tax Cuts and Jobs Act. Moreover, broader markets were also boosted after shares of both Cisco as well as Wal-Mart surged after the companies posted stupendous earnings. Meanwhile, the industrial production in October increased 0.9%.

The Dow Jones Industrial Average (DJIA) increased 0.8%, to close at 23,458.36. The S&P 500 Index (INX) gained 0.8% to close at 2,585.64. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,793.29, gaining 1.3%. Advancers outnumbered decliners on the NYSE by a 3.23-to-1 ratio. On Nasdaq, advancing issues outnumbered the declining ones by a 3.59-to-1. The CBOE VIX decreased 9.4% to close at 11.90.

Tax Bill Cleared by the House

In a 227 to 205 vote on Thursday, House of Representatives finally passed the much awaited tax cuts legislation now named as the Tax Cuts and Jobs Act. This not only refurbished the existing U.S. tax code but also took President Trump and his team one step closer toward realizing their most important agenda — tax reforms.

Members of the GOP remained positive about the how the Bill would actually improve the overall economy. House Speaker, Paul Ryan even commented that the legislation would result in more jobs, increased wages and above all, ‘better take-home pay.’ The Bill reduces the corporate tax rate to 20% from the current rate of 35%.

It also reduces tax brackets to just four slabs from the current seven slabs and also revokes the estate tax system. Eventually, the United States will move to a territorial tax system, under which a company can be taxed only where income is earned.

Not so surprisingly, none of the Democrats cast their vote for the Bill. Moreover, Republicans from New York and New Jersey also did not vote for the legislation. In all, thirteen Republicans refused to vote for the Bill. Such Republicans particularly did not support the abolishment of state and local income tax deductions under the Bill.

Economists believe that the Bill has yet to clear the biggest hurdle. This would be Senate Finance Committee’s proposal to delay the implementation of the corporate tax cut — the most important facet of the legislation — to 2019. However, broader markets gained traction on Thursday after the Tax Bill was passed by the House.

What Do the Benchmarks Say?

The Dow amassed 187.08 points to close in the green on Thursday. This comes just a day after the blue-chip index posted its worst one-day drop since Sep 5. While gains for the Dow were boosted primarily by the Tax Bill being passed in the House, a surge in the shares of Cisco (CSCO - Free Report) and Wal-Mart (WMT - Free Report) helped the blue-chip index post a brilliant show. This also led to the Dow gaining more than 200 points earlier in the session.

Shares of Cisco gained 5.2% on Thursday after posting stupendous earnings for first quarter of fiscal 2018. Cisco Systems Inc. reported first-quarter fiscal 2018 non-GAAP earnings of 61 cents per share beating the Zacks Consensus Estimate by a penny. However, the figure remained unchanged on a year-over-year basis. Acquisitions have negatively impacted earnings by a penny in the quarter. Revenues declined 1.7% year over year to $12.14 billion and were almost in line with the Zacks Consensus Estimate. (Read More)

Whereas the shares of Wal-Mart gained almost 11% after posting third quarter 2017 earnings which surpassed the expectations. The Arkansas-based retailer posted $123.18 billion in quarterly revenues and adjusted EPS of $1.00 per share, which both beat Wall Street expectations. Wal-Mart also raised its full-year earnings guidance to help its stock price hit a new intraday trading high of $98.01 per share. (Read More)

Such gains also boosted the S&P 500 which surged 21.02 points. Of the 11 major sectors of the S&P 500, nine ended in the green, with tech shares leading the advancers. The Technology Select Sector SPDR ETF (XLK) surged 1.4%. Such gains were made possible by a surge in the shares of Cisco after posting an earnings beat. Moreover, this rally in tech shares also bolstered the Nasdaq which gained 87.08 points to finish in the green. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

On the economic data front, initial claims for the last week rose to 249,000 — an increase of 10,000 form the last week. The consensus estimate for the period was 235,000. This also marks its six-week high. Meanwhile, industrial production for October surged 0.9%, surpassing the consensus estimate of 0.6%.

Stocks That Made Headlines

Ross Stores Rallies on Solid Q3 Earnings, Raised View

Ross Stores, Inc. (ROST - Free Report) reported solid third-quarter fiscal 2017 results, wherein both the top and bottom lines topped estimates and improved year over year. (Read More)

SCANA's Subsidiary Provides Solutions for Abandoned Plant

SCANA Corporation’s (SCG - Free Report) principal subsidiary — South Carolina Electric & Gas Company (“SCE&G”) — has announced plans to resolve issues relating to the abandoned V.C. Summer Station nuclear construction project. (Read More)

Gap Stock Up on Q3 Earnings & Sales Beat, Raises View

Shares of Gap Inc. (GPS - Free Report) were up 7.7% yesterday in after-hours trading as the company raised its fiscal 2017 outlook following the better-than-expected third-quarter results. (Read More)

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