US Stocks Boosted by Tax Reform Powell Nomination

After trading mixed earlier in the session in response to the release of the tax-reform plan proposed by Republicans, U.S. equity indexes managed to close higher for the session after investors digested a few of the details. The nomination of Federal Reserve Governor Jerome Powell by President Trump also helped give the markets a boost.

In the cash market, the blue chip Dow Jones Industrial Average finished the session at 23516.26, up 81.25 or +0.35%, the benchmark S&P 500 Index settled at 2579.85, up 0.49 or +0.02% and the tech-based NASDAQ Composite ended the day at 6717.03, up 0.50 or +0.01%.

Shares of Boeing gave the Dow a boost while shares of Allstate helped underpin the financial sector and the S&P 500 Index. A plunge in homebuilder stocks kept a lid on prices. The NASDAQ Composite settled nearly flat as tech investors reacted to the news that the new tax reform bill contains a 12 percent rate on repatriated cash.

Economic News

The U.S. House of Representatives released proposals to overhaul the tax code.

A summary of the document revealed that the plan calls for slashing the corporate tax to 20 percent from 35 percent and reducing the number of tax brackets for individuals.

The initial proposal is not likely to pass into law quickly and investors believe that it's not enough to be meaningful. Some are doubtful that it'll have any significant impact on the overall GDP of the country.

Over the long-run, cutting taxes would increase spending, drive inflation and U.S. interest rates higher. However, since the process to become law may be lengthy, the proposal is having no bullish impact on the dollar at this time.

In other news, the Challenger Job Cuts report came in at -3.0%. This report represents the change in the number of job cuts announced by employers. 'Actual' less than 'Forecast' is good for the U.S. Dollar. Last month, the report came in at -27%.

Weekly Unemployment Claims were 229K, better than the 235K estimate and 234K previous reading.

Preliminary Nonfarm Productivity was 3.0%. This was slightly worse than the 2.5% forecast. The previous number was raised to 1.5%.

Preliminary Unit Labor Costs were 0.5%, matching the forecast. The previous report was revised downward to 0.2%.

In other news, Fed Governor Jerome Powell delivered a speech Thursday morning but dropped no hints about his impending appointment to lead the central bank.

In his speech, Powell discussed Libor, or the rate that banks charge each other for short-term loans. Wall Street is transitioning away from the rate, a process that Powell said will be costly but important for the financial system's integrity.

"So, while much has been done, there is more still to do. I have been heartened in seeing that many participants are already confronting these issues," Powell said in his prepared remarks.

Late in the day, President Trump nominated Fed Governor Jerome Powell to become the central bank's next chair. Powell's nomination was widely expected by experts and most investors. He is dovish like current Chair Janet Yellen so investors expect to see the gradual raising of interest rates into the future.

Gold

Gold prices hit a one-week high on Thursday in reaction to the weaker U.S. Dollar and increased demand from Chinese retail investors. The precious metal also picked up strength following the nomination of Fed Governor Jerome Powell, a noted Federal Open Market Committee dove. Prices fell into the close after demand for higher-risk assets increased and as investors squared positions ahead of the U.S. Non-Farm Payrolls report on Friday.

Crude Oil

U.S. West Texas Intermediate and international-benchmark crude oil recovered from early weakness on Thursday to post a slightly higher close. The markets were primarily supported by OPEC-led supply cuts designed to trim the global supply glut and stabilize prices as well as expectations for strong demand.

This article was originally posted on FX Empire