By Thornton McEnery and William Watts
The S&P 500 index booked its first closing record in seven weeks on Thursday, as investors digested a parade of earnings reports and monitored a potential setback in White House efforts to raise the corporate tax rate.
What did major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.86% closed down 6.26 points, or less than 0.1%, at 35,603.08.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.90% ended 13.59 points higher, or 0.3%, at a record 4,549.78, after setting an intraday record.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.55% rose 94.02 points, or 0.62%, to finish at 15,215.70.
On Wednesday, stocks rose with the Dow Jones Industrial Average finishing 0.05% away from its Aug. 16 record close and the S&P 500 ending just 0.02% away from its record settlement. The Nasdaq Composite eked out a small gain, leaving it 1.6% away from its Sept. 7 closing record.
What drove the market?
A good start to third-quarter earnings season has helped investors put the nervousness of September behind them, even as concerns over inflation, COVID-19 and China’s economy still linger.
Of the approximately 70 S&P 500 companies that have reported results so far, 86% posted earnings that topped analysts expectations, according to Refinitiv.
That optimism appears to be spreading, said Baird’s Michael Antonelli, as investors begin to embrace a fading pandemic, a strong economy moving into yet another solid earnings season, a correction in the rearview mirror and that stocks usually perform best in the fourth quarter.
Antonelli, a market strategist, was even sanguine about inflation.
“They are talking about supply chain issues and logistics on the Today Show. Meanwhile the ports are opening 24/7, the rails are running 24/7, and once we get trucking sorted out supply chains will unclog,” he said. “We just can’t look at inflation right now without acknowledging the bottlenecks.”
Investors also monitored developments around President Joe Biden’s proposed spending bills, after The Wall Street Journal reported Wednesday that Democratic Senator Kyrsten Sinema of Arizona would oppose any increases in the tax rates for businesses, the rich or capital gains .
“The idea of no significant [tax] rate hikes could be a positive for the stock market, which has worried about the impact of a rate increase from 21% now to 25% on corporations,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note. “But this might not be a victory, since other provisions — many controversial — may have to be considered to make up the revenue gap.”
The Washington Post reported late Wednesday that Biden’s advisers are floating new plans, including a tax on billionaires’ assets, a minimum tax on corporations and a tax on companies issuing stock buybacks, potentially raising hundreds of billions of dollars.
In other news, indebted Chinese property developer, Evergrande /zigman2/quotes/208605330/delayed HK:3333 -3.93% , was back in the headlines on Thursday after the property developer ended talks to sell most of its property services division .