Markets finally shrugged off concerns about the proposed tax legislation this week after House Republicans garnered enough votes to pass the $1.5 trillion tax cut last Thursday. At the beginning of the week, stocks traded with strong bullish momentum and the Dow found rejuvenated enthusiasm to aim for another record high ahead of the Thanksgiving holiday.
After new home sales soared to a new record high since 2007, the existing home sales also unexpectedly went up in October, to 5.48 million, indicating consumers are not only confident to spend more at the retail level, but are also feeling secure to take on larger financial commitments.
The meeting minutes from the Federal Reserve also showed that policymakers generally agreed the economy is poised for strong growth in the coming months. While some Fed board members commented that the corporate tax cut will boost investment, it also prompted them to say that interest rates will have to go up in the near term to avoid any potential overheating of the economy. As a result, the market took a breather on Wednesday after several days of strong bullish moves.
All in all, get ready to head into December on a positive note as the sideways price action of the market might be ending ahead of a blockbuster holiday sales season for retailers, fueled by record-high consumer confidence and a strong labor market.
Be sure to check out our previous week’s edition here in which investors were concerned about the passing of the GOP tax legislation.