By William Watts and Joy Wiltermuth
U.S. stocks closed mostly higher Wednesday as investors awaited a speech from President Joe Biden outlining a multitrillion dollar infrastructure spending plan that’s expected to include higher taxes on corporations.
The big three equity benchmarks also closed out a hectic month and quarter with gains, each realizing a four-month win streak.
How did major indexes perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.28% fell 85.41 points, or 0.3%, to end at 32,981.55 after bouncing between small gains and losses.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.44% rose 14.34 points, or 0.4%, to end at 3,972.89, after touching a new intraday record of 3,994.41.
The Nasdaq Composite jumped 201.48 points, or 1.5%, closing at 13,246.87.
For the month, the Dow rose 6.6%, and gained 7.8% for the quarter. The S&P 500 rose 4.2% in March and 5.8% for the quarter. The Nasdaq Composite eked out a 0.4% monthly gain and advanced 2.8% for the quarter.
What drove the market?
Rising technology shares helped lift the S&P 500 index to a new intraday trading record ahead of Biden’s planned speech to unveil the first part of his “Build Back Better” plan in Pittsburgh later Wednesday.
An outline of the proposal released by the White House detailed $2.3 trillion worth of infrastructure investments , with a focus on bolstering roads, airports, safe water supplies, greener technology and more. It would be offset by raising the tax on corporate income from 21% back to 28% after being cut in 2017 from 35% to 21%.
News reports said the size of the Biden plan could further rise to $4 trillion as additional parts are announced, offset by increases in tax rates on the wealthy and investors.
The tech sector rose 1.5% in afternoon trade, making it the top S&P 500 gainer, followed by consumer discretionary at 0.8%, according to FactSet data.
“It’s all about stimulus, stimulus, stimulus,” Kent Engelke, chief economic strategist at Capitol Securities Management, told MarketWatch. “Ultimately, it is going to be viewed as a bad word,” he said, but not likely until the economy overheats or corporate taxes are raised to offset the spending, hurting company profits.
However, Nicholas Colas, co-founder of DataTrek Research, said in a note that, “We have always been of the opinion that markets never believed President Trump’s corporate tax cuts would be permanent. Raising them to the old levels would therefore not change our bullish outlook.”
“Changes in individual tax rates, especially those related to capital gains, are another matter. Given the outstanding gains of the last few years, especially in speculative tech stocks, changes in cap gains would certainly cause taxable account selling with no near-term offset in demand,” he wrote.