Stocks whipsawed, dollar surges on tax plan detail

US stocks fluctuated near all-time highs and the dollar rallied after the White House unveiled a proposal to cut corporate taxes in an effort to boost the rate of economic growth.

The S&P 500 Index climbed above its closing record as Treasury Secretary Steven Mnuchin outlined a lower corporate tax rate and a break on bringing overseas profit to the US. The index fluctuated near that level as officials left unanswered questions about whether the plan would be paid for, or how. Stocks were whipsawed by policy speculation throughout the day, tumbling from session highs after Politico reported the administration may end Nafta. Equities also got hit when the Federal Communications Commission chairman proposed rolling back the net-neutrality rule that forbids broadband providers from interfering with web traffic. The peso slid 1.8 per cent, while Bloomberg’s dollar index jumped the most since March 2. Oil climbed toward $50 a barrel on data showing a drop in inventories.

Investors remained fixated on the prospect for tax reform that ostensibly would boost economic growth and corporate profits. Focus may turn to reaction from Congressional Republicans. The report that Nafta remains in White House crosshairs rekindled angst that protectionist trade policies could harm global growth.

“The tax cuts could stimulate the US economy and help the stock market move higher, but removing Nafta would hurt companies that are multinational in nature,” said Todd Rosenbluth, director of ETF and mutual funds at CFRA, an independent research provider. “Because investors have been pointing to the Trump team, thinking there was going to be tax relief, the fact that they’ve put something forward is being viewed favourably.” and deductions through to their owners, who then are taxed at their individual income tax rates.

The White House proposal mirrors parts of the tax plan Trump proposed during the campaign, which would cost the government $6.2 trillion in the first decade, and more than $20 trillion by 2036 after accounting for interest costs and macroeconomic factors, according to an analysis by the non-partisan Tax Policy Centre.