S&P 500; US Indexes Fundamental Daily Forecast – Markets Ripe for “Buy the Rumor, Sell the Fact” Trade

The major U.S. stock indexes closed at all-time highs on Monday as investors heavily speculated that Congress would finally vote on a bill that would cut corporate taxes that Republicans have been pushing to overhaul for most of 2017. The indexes were also supported by a number of corporate deals that created a bullish tone in the market.

At the close of the cash market, the benchmark S&P 500 Index settled at 2690.16, up 14.35 or +0.54%, the blue chip Dow Jones Industrial Average rose 24792.20, up 140.46 or 0.57% and the tech-based NASDAQ Composite ended the session at 6996.68, up 60.10 or +0.87%.

Bullish investors bought stocks on the belief that the tax plan is going to be passed tomorrow. The strong rally suggests that investors also believe that with lower corporate taxes looming, stock prices are still inexpensive.

According to news reports, the Republican-led Congress is expected to vote as early as Tuesday on a plan that would slash the federal corporate tax rate to 21 percent from 35 percent.

In other news, Campbell Soup announced it will buy Snyder’s-Lance for nearly $4.9 billion. Chocolate maker Hershey announced a deal to buy Amplify Snack Brands. Finally, Oracle said it will buy Aconex – a software company based in Australia – for $1.2 billion.

At this point in the rally, it seems all investors have to worry about is a “buy the rumor, sell the fact” situation. Investors have been buying stocks in anticipation of the tax deal so they may use the signing of the bill into law as a reasonable excuse to book profits.