Surging banks lead Wall Street to highs as tax plan advances

By Lewis Krauskopf

(Reuters) - Wall Street surged to record highs on Tuesday led by sharp gains in bank stocks, and boosted by progress for a tax cut bill, strong consumer confidence data and encouraging comments from President Donald Trump's nominee to lead the Federal Reserve.

The S&P financial sector <.SPSY> soared 2.6 percent, its biggest daily percentage increase since March 1.

JP Morgan rose 3.5 percent and Bank of America gained 3.9 percent, while the S&P 500 banks index <.SPXBK> jumped 3.3 percent.

Trump's push for a big package of tax cuts moved past a potential obstacle as a Senate panel approved the measure despite lingering concerns from some Republican members.

 

Wall Street is closely watching progress on the Republicans' tax-reform efforts, with hopes that corporate tax cuts will further fuel the record-setting rally for equities.

"People are trying to move in front of what they think now is likely to be some tax reform on the corporate side," Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

The Dow Jones Industrial Average <.DJI> rose 255.93 points, or 1.09 percent, to 23,836.71, the S&P 500 <.SPX> gained 25.63 points, or 0.99 percent, to 2,627.05 and the Nasdaq Composite <.IXIC> added 33.84 points, or 0.49 percent, to 6,912.36.

All three indexes notched record closing highs.

The small-cap Russell 2000 <.RUT>, which is viewed as a barometer for tax reform's chances, rose 1.5 percent and also tallied a record closing high.

In testimony before a Senate committee, Jerome Powell, nominated to replace Janet Yellen as Fed chair, defended the need to potentially lighten regulation on the financial sector.

Powell overall presented himself as an extension of the Fed policies set under Yellen and her predecessor Ben Bernanke, confirming market expectations that he offered stability despite the change in Fed leadership.

Data showed that U.S. consumer confidence surged to a near 17-year high in November, driven by a robust labour market, while house prices rose sharply in September in the latest encouraging reports about the U.S. economy.

"Some of the data that we got today kind of confirms this goldilocks environment that we have," said Anthony Saglimbene, global market strategist at Ameriprise in Troy, Michigan.

"Unemployment and interest rates are low, confidence and asset prices are high."

Major indexes briefly pulled back from session highs after news that North Korea had fired a missile, before they rebounded.

In corporate news, Buffalo Wild Wings shares rose 6.3 percent after Roark Capital Group said it would buy the chicken wing restaurant chain.

Advancing issues outnumbered declining ones on the NYSE by a 2.16-to-1 ratio; on Nasdaq, a 1.88-to-1 ratio favoured advancers.

(Additional eporting by Sruthi Shankar and Rama Venkat Raman in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski)