US close: Stocks step higher as dollar dips amid Trump tax tiffs
US stocks indices extended their gains on a Tuesday that was light in terms of economic data with investors waiting for minutes from the Federal Reserve's last policy meeting and for the corporate earnings season to kick off later in the week.
By the closing bell, the Dow Jones Industrial Average had notched up another record high as it added 69.61 points or 0.31% to 22,830.68, while the Nasdaq composite finished 7.52 points or 0.11% higher at 6,587.25 and the S&P gained 5.91 points or 0.23% to end at 2,550.64.
Stocks were aided by a dip in the dollar, which was down against the euro, pound and yen, with the dollar index down 0.48% to 93.28.
Trading activity on Wall Street returned to normal levels after some Americans took time off to celebrate Columbus Day at the start of the week, though currency traders awaiting release of the Fed's September meeting minutes on Wednesday.
"Traders seem hesitant to add on their pro-dollar positions before they get some insight into Fed’s intentions from the FOMC minutes," said Konstantinos Anthis at ADS Securities, adding that unless there is a surprisingly bearish tone coming out of the minutes, the dollar is likely to be strengthen.
Last month the Federal Open Markets Committee announced it would initiate its balance sheet normalisation programme in October, which had been well flagged and so did not come as a surprise.
Fed Chair Janet Yellen subsequently said low inflation this year was creating uncertainty for monetary policymakers, despite a substantial improvement in labour market conditions, though she concluded that low inflation may be "transitory" and that it had not persisted long enough to negate the need for gradual policy tightening.
"However, some other FOMC policymakers have indicated a preference for allowing inflation to pick up before raising policy interest rates any further. The FOMC minutes are likely to show a range of views on inflation, financial stability, and the implications for policy," economists at HSBC said.
As for stocks, the risk-on appetite is "still going strong" with major equity benchmarks setting fresh records, said analyst David Madden at CMC Markets.
"The possibility of Donald Trump’s tax reforms being introduced are playing into bullish activity but an argument between the US President and fellow Republican Bob Corker would derail the new tax proposals from getting the green light."
For some, the spat is more than a storm in a tea cup. Analyst Naeem Aslam at Think Markets said Trump’s problems pushing his tax plan through show the president "is so ineffective that he can’t even convince his own party leaders".
He added: "Without the proposed tax plan, there is little that the Fed can do to push the GDP growth. President has failed on so many of his key plans and another failure on the tax overhaul could be the final nail in the coffin."
Indeed, on Tuesday the International Monetary Fund pared back its growth forecasts for the US economy as it no longer expects President Trump's proposed tax cuts to happen.
The US economy is still expected to expand at a 2.2% rate in 2017 and 2.3% in 2018, but this was down from its forecast in April when growth of 2.3% was predicted for this year and 2.5% for 2018.
Elsewhere, the National Federation of Independent Business index of small business activity fell to a 10-month low of 103.0 in September from 105.3 the month before, missing expectations for a reading of 105.0.
Pantheon Macroeconomics said: "The sharp drop in the headline index suggests that small firms have reacted much more negatively to the hurricanes than bigger businesses. Most of the damage is in the sentiment numbers, with sales expectations down 12 points, good time to expand down 10 points, and economic expectations down 6 points.
"This drop in sentiment filtered into capex plans, which dropped by 5 points. We expect all these numbers to rebound over the next few months, as the hurricane hit fades."
In corporate news, Wal-Mart stock surged to a two-year high as the mammoth retailer looked to take the fight back to challengers like Amazon by targeting a 40% rise in US online sales next year. The company guided to overall net sales growth of at least 3% in the year to January 2019, and unveiled a $20bn buy back to be carried out over the next two years.
Procter & Gamble was trading lower after an annual general meeting during which a major proxy vote among shareholders saw Trian Fund Management chief executive Nelson Peltz narrowly fail to get a seat on the board.
Pfizer stock was up after the pharma group said it may sell off all or part of its consumer healthcare business as it begin a strategic review of the unit.
Walt Disney was also making headlines after releasing the latest trailer for 'Star Wars: The Last Jedi'.
Dow Jones - Risers
Wal-Mart Stores Inc. (WMT) $84.13 6.49%
Chevron Corp. (CVX) $118.80 1.51%
International Business Machines Corp. (IBM) $148.56 1.38%
Caterpillar Inc. (CAT) $128.19 0.99%
Pfizer Inc. (PFE) $36.42 0.97%
Boeing Co. (BA) $260.93 0.91%
Coca-Cola Co. (KO) $45.84 0.84%
Travelers Company Inc. (TRV) $125.94 0.70%
Exxon Mobil Corp. (XOM) $82.27 0.67%
McDonald's Corp. (MCD) $160.58 0.61%
Dow Jones - Fallers
General Electric Co. (GE) $23.35 -4.22%
Unitedhealth Group Inc. (UNH) $194.64 -1.71%
Nike Inc. (NKE) $51.53 -1.70%
Goldman Sachs Group Inc. (GS) $242.53 -1.39%
Procter & Gamble Co. (PG) $91.62 -0.77%
Cisco Systems Inc. (CSCO) $33.55 -0.62%
Intel Corp. (INTC) $39.65 -0.53%
Walt Disney Co. (DIS) $99.62 -0.45%
Home Depot Inc. (HD) $165.16 -0.42%
Merck & Co. Inc. (MRK) $64.46 -0.14%
S&P 500 - Risers
Wal-Mart Stores Inc. (WMT) $84.13 6.49%
American Airlines Group (AAL) $53.03 4.80%
Altria Group Inc. (MO) $65.01 3.93%
United Continental Holdings Inc. (UAL) $67.72 3.79%
Philip Morris International Inc. (PM) $115.09 3.50%
H&R Block Inc. (HRB) $25.72 3.46%
Micron Technology Inc. (MU) $41.98 2.49%
NiSource Inc. (NI) $26.36 2.45%
News Corp Class A (NWSA) $13.50 2.43%
Helmerich & Payne Inc. (HP) $52.76 2.40%
S&P 500 - Fallers
DaVita Inc (DVA) $54.32 -9.19%
Tenet Healthcare Corp. (THC) $14.40 -8.05%
Chesapeake Energy Corp. (CHK) $3.91 -6.79%
Apache Corp. (APA) $42.47 -5.98%
General Electric Co. (GE) $23.35 -4.22%
United States Steel Corp. (X) $24.98 -4.11%
Juniper Networks Inc. (JNPR) $27.27 -4.08%
W.W. Grainger Inc. (GWW) $173.91 -3.42%
Universal Health Services Inc. (UHS) $106.57 -3.23%
TEGNA Inc (TGNA) $12.98 -3.21%