Tax cuts to help shares
by Peter Switzer
Wall Street was higher for most of the day as President Barack Obama arrived at an agreement with Republicans over extending the Bush tax cuts for another two years. An extension to unemployment benefits and payroll tax cuts also helped boost the market.
The S&P 500 added 0.63 points or 0.05 per cent to 1223.75, while the Dow shaved off 3.03 points or 0.03 per cent to 11,359.16.
What’s intriguing about these developments is that there’s some significant opposition towards the tax extensions from some Democrats.
This should help consumer and business confidence and now the reaction on Christmas sales will be an important indicator for investors to watch over the next few weeks.
Between QE2 and these fiscal measures the Fed and the Presidency are doing their best to stimulate the US economy and if this doesn’t help stocks, nothing will!
The market was watching Ireland as well where the parliament was expected to pass an austerity budget. This helped the euro gain some ground.
US Data watch
On the economics front, there were 3.4 million job openings in October, which was 44 per cent higher than the low of July 2009.
Meanwhile forecasts from the Institute for Supply Management for next year for manufacturing revenue was tipped to rise by 5.6 per cent, while non-manufacturing revenue was expected to rise by 3.4 per cent.
One final rumour doing the rounds to explain why the market sold off late in the day was that a big number of insider trader charges were expected to be levelled against some significant hedge funds and others.
The best bit about the tax cut news is that it has taken out another uncertainty issue for investors and it’s the unknown which is still keeping investors sitting on piles of cash on the sidelines.
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Published on: Wednesday, December 08, 2010blog comments powered by Disqus