Banks help power more record highs
Banks led a broad rally in US stocks Tuesday, lifting the market to a milestone-shattering finish. Gains by industrial stocks, retailers and health care companies also helped drive the major stock indexes to record highs.
Investors were encouraged by news that a Senate committee cleared the way for a tax reform bill to go before the full Senate. Financial stocks also received a boost from Federal Reserve chair nominee Jerome Powell, who told another Senate committee that the Fed would consider easing up on bank regulations.
Encouraging economic data and the latest batch of company earnings and deal news also helped drive the rally, which gave the Standard & Poor's 500 index its best day since Sept. 11. "When you're in a market where you're at new highs with the averages, in theory, nobody has losses," said Mark Chaikin, founder of Chaikin Analytics. "Given seasonal patterns, I expect that we'll see the market strong into year-end."
Gainers outnumbered decliners more than 2-to-1 on the New York Stock Exchange. Early on, investors had their eye on Washington, where the Senate Budget Committee weighed the chamber's version of a sweeping tax bill. The committee voted 12-11 to pass the Republican tax plan late Tuesday afternoon.
The sweeping measure, which would lower corporate tax rates, now advances to the full Senate. GOP leaders hope to have the Senate take it up this week. Another panel, the Senate Banking Committee, drew the spotlight early on as it heard testimony from Powell, who is expected to win confirmation to succeed Janet Yellen.
In written testimony released before the hearing, Powell said that, if confirmed as the next Fed chairman, he expected the central bank to continue raising interest rates gradually. Powell also said that, under his leadership, the Fed would consider ways to ease the regulatory burdens on banks while preserving the key reforms Congress passed to try to prevent another financial crisis.
"Powell's testimony cally said that he's a basiJanet Yellen on steroids," Chaikin said. "His testimony gave the market a lot of confidence." Banks and other financial stocks had their best day since March. The sector is up 15.2 percent this year. Investors also got a double dose of encouraging data on the U.S. economy Tuesday. The Conference Board said that its consumer confidence index rose this month to its highest level since November 2000.
Economic growth clocked at a healthy 3 percent annual pace in the third quarter, and the unemployment rate has fallen to a 17-year low of 4.1 percent. A separate index showed U.S. home prices rose at the fastest pace in more than three years in September, fueled by a record-low supply of homes for sale.