“For investors, each 1 percent reduction in the corporate tax rate delivers more than $1 of EPS growth. Additional EPS growth will come from share repurchases made following a repatriation tax change which will also be included,” Strategas’ Jason Trennert said in a note Tuesday.
Congress isn’t expected to vote on tax reform until this summer at the earliest. Prospects for significant change in taxes dimmed when the Republicans pulled their health-care reform bill in March — Trump has wanted to get past health care before addressing taxes.
Lack of political clarity and geopolitical worries have kept stocks in a range since the S&P 500 last closed at a record on March 1. But Tuesday, the animal spirits were back, pushing the Dow Jones industrial average up more than 200 points to above 21,000 in part because of optimism about Trump’s tax announcement Wednesday.
“If they roll out some very vague details, I think the market could take a bit of a stumble from that,” said John Caruso, senior market strategist at RJO Futures. “Once it hits the market I think you’ll see them selling the news.”
— CNBC’s John Melloy contributed to this report.
Watch: Trump holds tax meeting with Mnuchin
