The News Herald (Willoughby, OH)
Hopes for corporate tax cuts push up stocks
U.S. stocks climbed again and set more records as investors grew more certain Republicans will pass their tax plan.
NEW YORK » U.S. stocks climbed again Monday and set more records as investors grew more certain Republicans will pass their tax plan this week. Technology companies climbed, as did banks and retailers, which are likely to see lower taxes.
Stocks have made hefty gains as the GOP appeared to shore up enough support to pass the bill, and Congressional Republicans are scheduled to start voting on the legislation Tuesday. The biggest gains have gone to companies that pay relatively higher tax rates, including smaller, U.S.-focused companies, banks and retailers.
“A lot of those companies don’t have, or haven’t taken advantage of, all of the nooks and crannies of the tax code,” said Jason Pride, director of investment strategy at Glenmede. He thinks the average company will get a roughly 4 percent boost to its profits, and a tax break on corporate investment could push companies to spend more money on equipment.
Deal news also helped put investors in a buying mood. Two major food companies agreed to buy smaller snack makers: Campbell Soup plans to purchase pretzel maker Snyder’s-Lance for $4.87 billion and Hershey will buy Amplify Snack Brands for $1.2 billion.
The Standard & Poor’s 500 index gained 14.35 points, or 0.5 percent, to 2,690.16. The Dow Jones industrial average advanced 140.46 points, or 0.6 percent, to 24,792.20. The Nasdaq composite traded above 7,000 for the first time but later slipped below that milestone. It rose 58.18 points, or 0.8 percent, to 6,994.76. The Russell 2000 index of smaller-company stocks climbed 18.50 points, or 1.2 percent, to 1,548.92.
Campbell Soup will buy pretzel maker Snyder’s-Lance for $50 a share, or $4.87 billion. The deal will give Campbell a group of brands including Snyder’s of Hanover, Kettle Brand and Pop Secret. Snyder’s climbed $3.25, or 6.9 percent, to $50.04. It has surged 27 percent since Tuesday’s close on reports Campbell Soup was preparing a bid. Campbell gained 7 cents to $49.66.
Chocolate and candy maker Hershey agreed to buy Amplify Snack Brands for $12 a share, or $1.2 billion. Amplify’s foods include Skinny Pop popcorn, Tyrrells potato chips and Oatmega protein bars. Amplify went public in August 2015 at $18 a share but had fallen steadily for more than a year. On Monday its stock jumped $5.01, or 71.6 percent, to $12.01. Hershey added 12 cents to $114.26.
Stocks also climbed Friday as Republicans in Congress appeared to shore up support to pass their tax plan. They hope to muscle the $1.5 trillion bill through Congress this week before a year-end break. The bill slashes the corporate tax rate, and that’s especially significant for smaller and more domestically-focused companies because they pay higher rates than larger, more multi-national companies do.
Financial companies including regional U.S. banks did well Monday. Fifth Third Bancorp rose 44 cents, or 1.5 percent, to $30.47 and KeyCorp gained 40 cents, or 2 percent, to $20.16.
Among smaller companies, wheel and tire supplier Titan International climbed $1.05, or 8.9 percent, to $12.84. Clothing retailer Abercrombie & Fitch rose $1.12, or 6.7 percent, to $17.83. Instant-win lottery ticket maker Scientific Games advanced $1.25, or 2.5 percent, to $52.10.
Other leaders included technology companies. Apple gained $2.45, or 1.4 percent, to $176.42, another all-time high. Cloud services provider Akamai Technologies leaped after Elliott Management, led by activist investor Paul Singer, disclosed a 6.5 percent stake in the company and said it wants to discuss changes to the company’s business and other areas. Akamai climbed $7.91, or 13.7 percent, to $65.67.
Bitcoin futures began trading on the Chicago Mercantile Exchange on Sunday. They dipped $375, or 1.9 percent, to $19,125. Bitcoin futures started trading on the Cboe last week.