US open: Stocks edge higher despite doubts over Trump tax plans

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Sharecast News | 27 Apr, 2017

Stocks managed to hold onto slight gains at the open as investors continued to mull over the White House's tax cut plans announced the night before amid a barrage of largely as expected economic data.

As of 1434 GMT the Dow Jones Industrials was higher by 0.05% to 20,985.87, alongside gains of 0.27% in the Nasdaq Composite to 6,041.22 and a rise of 0.07% for the S&P 500 to 2,389.24.

However, news that the White House was not going to pursue an exit from NAFTA, opting instead for a renegotiation, was likely a relief for many operators.

On Wednesday, US stocks ended slightly lower as investors were left disappointed by the lack of specifics in Trump's tax reform announcement. As widely expected, the announcement included plans to cut corporate tax to 15% from 35% and reduce the top individual tax rate to 35% from 39.6%.

Yet the US administration's proposals did not include specifics on the costing of the cuts.

Among other things, that led some to speculate that they might not be 'deficit neutral' and therefore not permanent, expiring in 10 years' time instead.

Also worth noting, the proposals in effect ditched plans for a Border Adjustment Tax as a means of financing the fiscal expansion, contrary to the wishes of many Republicans.

Acting as a backdrop, durable goods orders undershot market forecasts, rising by 0.7% month-on-month in March (consensus: 1.2%), although the 'miss' was offset by upwards revisions to figures for the prior month.

The headline read prompted Ian Shepherdson, chief economist at Pantheon Macroeconomics to say: "Doubtless this report will spark another round of hand-wringing over the gap between the soft and hard data, but the weather might well have materially depressed these numbers and we want to see what happens in the next couple of months before reaching any firm conclusions."

Initial weekly jobless claims increased by 14,000 during the week ending on 22 April to hit 257,000, coming in above the 245,000 expected by analysts.

In corporate news, shares in PayPal Holdings jumped 8.06% after its earnings late on Wednesday beat expectations and the company announced a $5bn stock-repurchase plan.

Stock in Ford Motor dropped after posting a 35% fall in first quarter net income in comparison to the year ago level as the carmaker's bottom line was hit by safety recall expenses.

Dow Chemical on the other hand slipped despite reporting both and top line figures which exceeded analysts' forecasts.

American Airlines fell like a stone with its retreating nearly 7% despite an in-line set of revenue figures for the first three months of the year, as the carrier announced a pay rise for its crew members.

After the close, results are due from Alphabet, Microsoft, Amazon and Starbucks.

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