Corporate earnings continued to demonstrate the strength of the economy, but stocks continued to trade sideways this week after uncertainty gripped the Senate’s plans to cut taxes by $1.4 trillion over the next decade.
The week opened with another narrow trading session on Monday as investors wanted to know how the tax cut proposals would play out later in the week. Moreover, the sudden increase in wholesale prices in October worried investors as it could push consumer inflations higher, prompting the Fed to hike rates much earlier than expected, and as a result, stocks traded with caution earlier in the week.
Furthermore, after Republican Senator Ron Johnson from Wisconsin expressed concerns about both House and Senate versions of the proposed tax cuts citing negative effects on small businesses and middle-class households, the Dow lost 0.6% on Wednesday. However, by Thursday morning, stocks made noticeable gains and the Dow was up by around 160 points in the early trading session.
To sum up, although it was another low-spirited week for stocks, the economy continued to show signs of strength as retail spending came out higher than expected, which indicated a potential increase in sales during the Christmas holidays next month.
Be sure to check out our previous week’s edition here, in which markets remained range bound, but the Dow still reached another record high.