Chronicle EditorLONDON — The US stock market sustained its upward march last Wednesday as investors played down fears that the Republican loss of a Senate seat in Alabama may reduce the chance of passing key legislative proposals, including tax reform.
The S&P 500 rose 0,2 percent to 2 668 in morning trading in New York, led by a 0,6 percent gain for industrial stocks and a 0,5 percent rise for the healthcare sector. The Dow Jones Industrial Average moved 0,6 percent higher to 24 643 and the tech-heavy Nasdaq Composite gained 0,3 percent to 6 879.
Roy Moore lost to democrat Doug Jones in Alabama last Tuesday night, cutting the Republican’s Senate majority to 51 seats to the 49 for the Democrats, as efforts to pass sweeping tax reform proposals enter the final stages. However, investors brushed off the result, arguing instead that it should prove a catalyst to pass tax reform before the year is out and the Mr Jones takes his seat.
“If anything it rushes the tax reform through this year before the seat officially changes hands,” said Peter Tchir, chief macro strategist at Academy Securities.
“It creates more impetus to get things done quickly.”
Tax reform is seen as a boon for stock markets, lowering the statutory tax rate and allowing companies to repatriate overseas cash more cheaply.
The placid stock market reaction to a significant political event is typical of 2017.
After surging during the market ructions during the 2008-09 financial crisis, volatility has remained muted this year and by some measures has dipped to its lowest level on record.
The average difference between the intraday high and low for US stocks hit a new low this year, according to research from Howard Silverblatt, a senior analyst at S&P Dow Jones Indices. The high-low spread sank to 0,1457 percent on November 24 — the lowest for any day since Mr Silverblatt’s records begin in 1962..
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