Trump nominates Jerome Powell as next Fed chairman
The Dow Jones Industrial Average closed at a record on Thursday, but the other main benchmarks saw muted moves, as the much-anticipated tax plan by House Republicans was unveiled and as President Donald Trump nominated Fed. Gov. Jerome Powell to run the Federal Reserve, as had been widely expected.
Read:Here's a breakdown of how the new House tax bill impacts your taxes (http://www.marketwatch.com/story/heres-a-breakdown-of-how-the-new-house-tax-bill-impacts-your-taxes-2017-11-02)
What did stock indexes do?
The Dow Jones Industrial Average reversed an earlier drop to rally 81.25 points, or 0.4%, to 23,516.26, marking its 55th record close of 2017, according to FactSet data. The S&P 500 index rose 0.49 point, or less than 0.1%, to finish at 2,579.85. The telecommunications, materials and consumer-discretionary sectors, all down at least 0.8%, capped gains for the broad-market benchmark. Shares of home-builder stocks (http://www.marketwatch.com/story/homebuilder-stocks-tumble-as-tax-plan-takes-bite-out-of-mortgage-deduction-2017-11-02) on the tax plan's proposal to cut mortgage-interest deductions also weighed on benchmark.
The Nasdaq Composite Index saw a slight decline, off 1.59 point, or less than 0.1%, to end at 6,714.94.
What's driving the markets?
House Republicans introduced the Tax Cuts and Jobs Act, which is aimed at cutting corporate taxes (http://www.marketwatch.com/story/heres-a-breakdown-of-how-the-new-house-tax-bill-impacts-business-taxes-2017-11-02)and repealing taxes paid by large estates. However, it is unclear when and if the bill will pass. Hopes for tax cuts have been credited for some market gains over the past year. However, Thursday's bill details sent stocks, bonds yields and the dollar lower as traders weighed its chances of passage and its composition.
Trump nominated Powell to replace Chairwoman Janet Yellen, whose term ends in February. He is viewed as a nominee who will be measured in his approach to raising borrowing costs and who also is favorable to scaling back Wall Street regulations.
(http://www.marketwatch.com/story/5-things-investors-need-to-know-as-the-bank-of-england-prepares-for-historic-rate-hike-2017-10-31)What are analysts saying?
"Unveiling of the tax bill is a step one. Approving and passing the legislation is step two and it's not at all clear in what form or shape this bill will be passed," said Kim Caughey Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group.
Andrew Hunter, U.S. economist at Capital Economics, sees the Republican tax plan adding roughly $1.5 trillion to the deficit over the next 10 years. "The bill will inevitably be amended further over the coming weeks, particularly when it goes to the Senate. Nevertheless, on balance, we still think a similar-sized package of tax cuts will be passed by early next year, giving economic growth a one-off boost in 2018," he said in a note.
"Under Powell expect a pragmatic path on monetary policy, along with an equally pragmatic path on industry regulation. In other words, continuity with a Republican tilt," said Quincy Krosby, chief market strategist at Prudential Financial.
Read: Text of Powell's statement on being named Fed chairman nominee (http://www.marketwatch.com/story/text-of-powells-statement-on-being-named-fed-chairman-nominee-2017-11-02)
"Jerome Powell has taken a fairly centrist approach to monetary policy in his votes for rates and only recently has had a more dovish tone based on the Fed's September meeting," said Wade Balliet, chief investment strategist at Bank of the West, in a note. "Powell's views may closely resemble those of Yellen and could continue monetary policy on its current path--a welcomed message for financial markets. Based on Powell's track record, confidence in the Fed may remain high."
What economic data were in focus?
Initial U.S. jobless claims (http://www.marketwatch.com/story/layoffs-in-us-back-to-nearly-45-year-low-jobless-claims-show-2017-11-02) fell by 5,000 to 229,000 in the week ended Oct. 28. That was lower than the 235,000 estimate of economists polled by MarketWatch.
Meanwhile, the productivity of American firms and workers (http://www.marketwatch.com/story/hard-at-work-us-productivity-hits-three-year-high-2017-11-02)rose 3% in the third quarter.
Which stocks were in focus?
Shares of Tesla Inc. (TSLA) slumped 6.8% after the electric car maker late Wednesday reported a wider-than-expected loss (http://www.marketwatch.com/story/tesla-announces-worst-quarter-ever-model-3-delays-2017-11-01).
Facebook Inc.(FB) fell 2.1% even after earnings out late Wednesday beat forecasts (http://www.marketwatch.com/story/facebook-stock-up-after-earnings-and-revenue-beat-2017-11-01). Lawmakers on Wednesday warned Facebook, Alphabet Inc.'s Google(GOOGL)(GOOGL) and Twitter Inc.(TWTR) that they are considering tougher regulations on social-media sites (http://www.marketwatch.com/story/lawmakers-warn-social-media-execs-to-fix-problems-or-face-new-regulations-2017-11-01)over concerns of foreign intervention via their platforms.
L Brands Inc. (LB) shares soared 8% after October sales growth. Ralph Lauren Corp.(RL) stock rose 3.1% after better-than-expected earnings and revenue.
DowDuPont Inc.'s (DWDP) stock was 1.8% lower even as the company exceeded profit and sales expectations.
Yum Brands Inc.(YUM) shares rose 6.5% after beating earnings estimates.
After the market close, Apple and Starbucks Corp.(SBUX) were slated to report quarterly results.
Read:Apple earnings: iPhone X supply is the question, but the answer may not matter (http://www.marketwatch.com/story/apple-earnings-iphone-x-supply-is-the-question-but-the-answer-may-not-matter-2017-10-30)
What are other markets doing?
The pound plunged to $1.306 (http://www.marketwatch.com/story/pound-strengthens-ahead-of-historic-boe-decision-2017-11-02) after the rate decision, compared with $1.3246 late Wednesday in New York.
The Bank of England (http://www.marketwatch.com/story/boe-delivers-a-typical-dovish-hike-analysts-react-to-historic-uk-rate-rise-2017-11-02)raised its key interest rate by a quarter-percentage point to 0.5%, meeting widely held expectations for the first rate increase to be enacted since July 2007.
The dollar retreated against most of its rival (http://www.marketwatch.com/story/pound-strengthens-ahead-of-historic-boe-decision-2017-11-02)s, with the ICE Dollar Index off 0.1% and breaking a two-day winning run.
European markets turned lower, while Asian markets closed mixed. Oil futures edged up (http://www.marketwatch.com/story/us-oil-prices-struggle-for-direction-hold-below-55-2017-11-02) 0.3% and gold prices settled flat (http://www.marketwatch.com/story/gold-edges-lower-as-bank-of-england-lifts-rates-2017-11-02).
--Mark DeCambre and Sara Sjolin contributed to this article.
(END) Dow Jones Newswires
November 02, 2017 16:36 ET (20:36 GMT)