The combination of a consistent message from the incoming Fed chief and progress on tax reform boosted investor sentiment.
“The combination of tax cut news and a friendly central bank is an elixir for the stock market,” says David Kotok, chief investment officer at Sarasota, Fla.-based money management firm Cumberland Advisors.
The biggest winners of the day were small-company stocks, as they are domestically focused and will benefit most from lower tax rates. In addition, bank stocks also rallied sharply on Powell’s comments on the Fed’s plan for gradual rate hikes. Higher interest rates boost bank earnings.