Market Action

The US tax reform bill was passed by both houses of Congress this week and signed into law on Friday. The law will reduce taxes for corporations and revamp taxation of multinational companies to encourage repatriation. The measure will also offer temporary tax rate cuts for some individuals and families while reducing the number of Americans who itemize deductions on their tax returns. Congress also passed a stopgap spending bill that will fund the government through mid-January.

The Dow Jones Industrial Average has closed at a record high 70 times so far in 2017, which is a record number of record closes. The previous record was 69 closing highs in 1995. The Nasdaq Composite, which closed above 7,000 for the first time this week, has recorded 72 closing highs, strongly surpassing the 1980 record of 62. The S&P 500 Index has posted a record close of 62 times so far this year, falling short of its 1995 record of 77.

In elections held Thursday, secessionist parties in Spain’s Catalonia region secured a narrow majority of seats – 70 of 135 – in the region’s parliament, a development that threatens to escalate the tensions between Barcelona and Madrid.

Sales of existing homes in the United States rose 5.6% in November to a nearly 11-year-high pace of 5.81 million units. (Only a 0.9% increase had been expected.) Tight inventories of homes for sale had been blamed for a relatively sluggish housing market for much of 2017.

Bank of Japan governor Haruhiko Kuroda said this week the BOJ will patiently maintain ultra-loose monetary policy given that inflation remains well below the central bank’s 2% target. With lending on the rise, Kuroda pushed back on the notion that BOJ policy is destabilizing the banking system.

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