US stocks surge to records as tax cut advances

Wall Street stocks surged to fresh records Tuesday on progress towards passage of US tax cuts and a benign confirmation hearing with Federal Reserve Chair nominee Jerome Powell. All three major US indices ended at new records in what was a better day for global stocks following Monday's lackluster performance. Markets in Asia and Europe ended either flat or higher, while London's FTSE scored a big gain after British banks cleared stress tests. US stocks were in positive territory most of the day after a strong report on consumer confidence and a low-key hearing with Powell, who is expected to sail to confirmation to replace Janet Yellen as central bank chief. The broad-based S&P 500 finished up 1.0 percent. Markets weakened somewhat on news of a North Korean missile launch, but pushed that aside after the Senate Budget Committee approved the tax reform plan, moving President Donald Trump's tax cuts towards a full Senate vote as soon as this week. "Investors have only baked in about a 50 percent chance of passage, so anything that moves the bill forward is going to be viewed as good news and a positive surprise," said Jack Ablin, chief investment officer at BMO Private Bank. The tax bill still faces several key steps before becoming law, with passage by the Senate to be followed by negotiations between House and Senate leaders to come up with a final version of the reform. Banking shares were especially strong, with JPMorgan Chase, Bank of America and Citigroup all gaining more than three percent. The sector is seen as well positioned to benefit from a tax cut and from the Fed's move towards easing some bank regulations. Powell's testimony was "largely in line with the Fed's current policy rhetoric, although he did sound a little more lax than current Fed Chair Janet Yellen in the area of regulation," said Briefing.com. "Specifically, Mr. Powell said rules implemented since the financial crisis are 'tough enough' and emphasized a desire to reduce regulatory constraints on smaller banks." - British banks clear tests - In European markets, Paris gained 0.6, Frankfurt 0.5 percent and London 1.0 percent. London's financial sector was somewhat boosted after the Bank of England declared that Britain's seven largest banks had passed its latest stress tests. It was the first time since the central bank began testing in 2014 that all seven -- Barclays, HSBC, Royal Bank of Scotland, Lloyds, Nationwide, Santander and Standard Chartered -- passed the assessments, and were found to be "resilient" to recession. Barclays and RBS fared the worst in the tests, struggling in the central bank's most severe economic stress scenario. However, the pair have taken action to strengthen their balance sheets since the end of last year. Royal Dutch Shell was another big gainer in London, winning 4.3 percent after announcing plans to resume all-cash shareholder dividends. - Key figures around 2155 GMT - New York - DOW: UP 1.1 percent at 23,836.71 (close) New York - S&P 500: UP 1.0 percent at 2,627.04 (close) New York - Nasdaq: UP 0.5 percent at 6,912.36 (close) London - FTSE 100: UP 1.0 percent at 7,460.65 (close) Frankfurt - DAX 30: UP 0.5 percent at 13,059.53 (close) Paris - CAC 40: UP 0.6 percent at 5,390.48 (close) EURO STOXX 50: UP 0.5 percent at 3,583.31 Tokyo - Nikkei 225: FLAT at 22,486.24 (close) Hong Kong - Hang Seng: FLAT at 29,680.85 (close) Shanghai - Composite: UP 0.3 percent at 3,333.66 (close) Euro/dollar: DOWN at $1.1845 from $1.1899 at 2200 GMT Pound/dollar: UP at $1.3354 from $1.3321 Dollar/yen: UP at 111.39 yen from 111.09 yen Oil - Brent North Sea: DOWN 23 cents at $63.61 per barrel Oil - West Texas Intermediate: DOWN 12 cents at $57.99 per barrel burs-jmb/hs