The stock markets continued to surge on Wednesday (Feb. 15) with the S&P headed for a seven-day winning streak after President Donald Trump reiterated his plan to cut taxes. Shares are also climbing on increased optimism that the Federal Reserve will raise interest rates when they meet next month.
According to a report, during a meeting with retail company executives, President Trump said he would slash taxes and simplify the tax code — things he had pledged to do on the campaign trail. As a result of Trump’s comments, the stock market has rallied for the fifth day in a row.
Also helping Wall Street Wednesday was good economic data, including retail sales and consumer prices, which the report said saw bigger-than-expected gains. Adding to all that, Fed Chair Janet Yellen said in testimony before Congress Tuesday that the Fed is likely to raise interest rates when it meets for its policy meeting in March.
“She (Yellen) has made it clear that she wants to raise rates,” said Neil Massa, senior equity trader at Manulife Asset Management in Boston, in a report. “Before she spoke yesterday, the March meeting wasn’t in play, but now, that is definitely on the table, and I think the numbers today bode well for her to do that.”
Financial stocks were leading the gains on Wednesday, which is not surprising since they are the ones that benefit the most when the Fed raises interest rates. As has been widely reported, President Donald Trump’s Treasury pick Steven Mnuchin, who was confirmed, told CNBC that there will be the “largest tax change since Reagan,” with widespread federal tax cuts in the offing. The tax cut will extend to the middle class, as the former Goldman partner said that tax cuts for the upper class will be offset by less deductions to pay for it. There will also be a ceiling in place for mortgage deductions. The tax cuts will lower the 35 percent top rate for businesses to 15 percent. Tax cuts could also bring economic growth to a sustainable level of 3–4 percent, he said.