Futures for the Dow Jones industrial average and other major indexes were modestly above fair value early Wednesday after President Trump urged tax cuts, ObamaCare repeal and $1 trillion in infrastructure spending in a major speech before Congress.
The Dow industrials fell 0.1% in Tuesday stock market trading, ending a 12-day win streak, the longest since 1987, ahead of Trump's speech and as Federal Reserve policymakers signaled a March rate hike was likely. The S&P 500 index sank 0.3%, the Nasdaq composite 0.6% and the small-cap Russell 2000 1.5%.
Futures for the Dow industrials. S&P 500 index and Nasdaq 100 rose about 0.2% vs. fair value.
That's despite late selling in Salesforce.com (CRM), Palo Alto Networks (PANW), Ambarella (AMBA), Ross Stores (ROST) and Veeva (VEEV). Palo Alto Networks dived on very weak guidance, while Salesforce, Amabarella, Veeva and Ross Stores also retreated on guidance.
Meanwhile, Snap (SNAP) is gearing up to price its big IPO late Wednesday. The Snapchat parent is attracting heavy demand, raising speculation that the photo-sharing app could be valued at $25 billion.
Trump reiterated major policy themes, not providing much detail for investors.
'Massive Tax Relief'
"My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone," Trump said. But he didn't specifically mention, let alone endorse, a border-adjusted tax that is a key plant of a House GOP corporate tax reform plan. Trump also vowed "massive tax relief for the middle class."
Six Dow components, including General Electric (GE), Boeing (BA) and United Technologies (UTX) have backed a border-adjustment tax. Retailers and apparel firms, including Dow stocks Wal-Mart (WMT) and Nike (NKE) are strongly opposed, while Dow automaker General Motors CEO Mary Barra said Tuesday that a border tax would be "problematic."
Infrastructure Spending
Trump also said he would push for $1 trillion in infrastructure spending, via public and private sources. That seems to measure up to his Monday pledge for "big" infrastructure boosts, but he didn't spell out the timing of any such initiative. With tax reform and ObamaCare among the other big issues facing his administration and Congress, a report last week said infrastructure may be pushed back to 2018.
Steel, concrete, construction and other infrastructure firms were big winners after Trump's election, but they've swung up and down in recent weeks as investors try to figure out what will actually occur, and when.
In Asian trading Wednesday, Japan's Nikkei index rose 1.4% as the yen on bets that the Fed will raise rates.
China's Shanghai composite advanced 0.3%. China's official manufacturing index rose 0.3 point in February to 51.6, a three-month high and signaling slightly faster growth. Readings over 50 suggest expansion.
Futures pointed to modest gains at the open in the U.K., France and Germany.
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