Stocks today rebounded from yesterdays losses thanks to strong earnings reports. Market action however came on lighter volume which is not something bulls like to see. Some commentators are also concerned that markets are getting narrow in that more stocks are hitting lows than highs but this is hidden from view because the companies hitting highs have such huge market caps. It is like the entire market index is becoming Amazon, Google, Apple and Faceplant.
At the close the Dow was up 187 points to 23,458. Trading volume was lower on the Dow but higher on the NASDAQ which traded to a high thanks to strength in Amazon.
WalMart reported good earnings which surprised on the upside and sent shares to a new high. Sales were up 4% and net income gained 2%. Computer biggy Cisco also reported earnings that outperformed expectations with a 2% revenue decline and profits that were flat. The company’s shares hit its highest mark since 2001 as its transition to the cloud is bearing fruit.
The markets were also affected by the Republicantax reform plan. The House voted today and passed the tax bill which will reform taxes to include a cut in corporate tax rates from 35% to 20%. Morgan Stanley CEO James “Have a go” Gorman said the plan could “stimulate” the economy if passed. The path forward however must now run through the Senate and then the reconciliation process before getting to the White House. Look for “sweets and tweets” as the efforts to pass this legislation by any means possible will unfold over the next couple of weeks.