Today's Market: Banks Help Stocks Higher After Senate Passes Tax Bill

Richard Drew, AP File Photo
​FILE - In this Oct. 2, 2014, file photo, the statue of George Washington on the steps of Federal Hall faces the facade of the New York Stock Exchange. Stocks are opening broadly higher on Wall Street, Wednesday, Dec. 20, 2017, led by gains in banks and industrial companies.

NEW YORK (AP) — U.S. stocks are slightly higher Wednesday morning after the Senate passed a bill that would cut corporate taxes, with the House expected to approve the measure later in the day. Stocks have climbed in anticipation of the bill's passage. Banks are climbing as interest rates continue to rise and smaller companies are doing a bit better than the rest of the market. Both groups tend to do more business within the U.S. than other companies, and may see a larger reduction in their tax bills as a result.

KEEPING SCORE: The Standard & Poor's 500 index picked up 2 points, or 0.1 percent, to 2,683 as of 10:10 a.m. Eastern time. The Dow Jones industrial average added 40 points, or 0.2 percent, to 24,794. The Nasdaq composite fell 10 points, or 0.2 percent, to 6,953 as technology companies traded lower. The Russell 2000 index of smaller-company stocks rose 4 points, or 0.3 percent, to 1,541.

TAX VOTE: The Senate narrowly passed the Republican-backed tax bill after midnight. The House had approved the measure Tuesday afternoon, but will have to hold a second vote to fix a few procedural problems. Investors have sent stocks higher in recent weeks as the bill's prospects improved. It would cut the corporate tax rate to 21 percent from 35 percent, which could boost corporate profits. Other provisions are intended to encourage companies to invest more money in their businesses.

In a note earlier this week, before the bill was passed but after it was largely complete, Barclays analyst Maneesh Deshpande said the bill will reduce the effective tax rate for S&P 500 companies to 20.7 percent from 26 percent because of changes in the ways overseas profits are taxed. He said household goods companies, banks and industrial companies will see the largest tax cuts, while technology and health care companies won't see as much of a difference.

FEDEX FLYING: FedEx raised its annual profit forecast after it said the holiday season, its busiest part of the year, is off to a strong start. The company's fiscal second quarter was better than investors expected. FedEx also said the tax bill could boost its profit this year by $4.40 to $4.50 a share because of changes in its deferred tax liabilities and a reduce tax rate. Its stock climbed $6.01, or 2.5 percent, to $248.55.

BONDS: Bond prices fell further. The yield on the 10-year Treasury note rose to 2.49 percent from 2.46 percent. When yields rise, it's good for banks because they can charge higher interest rates on mortgages and other kinds of loans. JPMorgan Chase rose $1.18, or 1.1 percent, to $101.70 and Citigroup gained $1.03, or 1.4 percent, to $75.74.

A BAD FIT: Clothing styling service Stitch Fix plunged $2.24, or 9 percent, to $22.52 after the company reported its results for the first time since it went public in November. Stitch Fix did about as well as investors expected, but said its profit margins decreased because of its newer men's and plus size clothes. Shipping costs increased and it had fewer products available in distribution centers.

ENERGY: Benchmark U.S. crude rose 10 cents to $57.66 a barrel in New York. Brent crude, used to price international oils, added 16 cents to $63.96 a barrel in London.

CURRENCIES: The dollar rose to 113.18 yen from 112.94 yen. The euro edged up to $1.1856 from $1.1845.

OVERSEAS: Germany's DAX dropped 0.7 percent and the French CAC 40 dipped 0.3 percent. In Britain, the FTSE 100 fell 0.1 percent. Japan's Nikkei 225 rose 0.1 percent. The South Korean Kospi lost 0.3 percent. The Hang Seng in Hong Kong slipped 0.1 percent.

-By Marley Jay, AP Markets Writer

Categories: Finance, National News