Stocks higher as Fed minutes show tax reform may boost US economy

Stocks were steady on Wednesday, holding on to their earlier gains after the Federal Reserve released its December meeting minutes which indicated the U.S. economy is on solid footing and that tax reform may drive business investment and ultimately GDP.

The latest minutes showed that Fed members thought that the information received since the November meeting indicated that economic activity had been rising at a “solid rate” and that the labor market had continued to strengthen.  Many officials expect this to continue in part due to the new tax law.

The Fed increased interest rates at its December policy-setting meeting by a quarter-point, the third hike of 2017. The meeting minutes also showed that Fed officials were far from agreement on hiking rates three times in 2018.

While markets were higher Wednesday afternoon, earlier in the session the S&P 500 and the Nasdaq set new record highs as traders digested the latest economic data. On Tuesday, the S&P 500, Nasdaq, the Russell 2000 and the Dow Transports finished in record territory.

Wednesday was the first session of 2018 that traders had some significant economic data to sift through, which included mortgage applications, auto sales, manufacturing data and construction spending, all of which showed ongoing improvement.

Meanwhile, traders are awaiting the December jobs report, which will be released on Friday. It is expected that the U.S. economy will have finished 2017 continuing its trend of solid jobs growth. Analysts polled by Thomson Reuters expect the U.S. economy will have added 190,000 jobs in December. About 2 million jobs have been created since President Trump won the election.

The Dow has been on a winning streak, and it is approaching its next major 1,000 point milestone, of 25,000 points.