The increasing likelihood that Congress would successfully pass tax reform heartened investors and pushed equities upward Monday, Dec. 18.
The Dow Jones Industrial Average rose 0.57% to 24,792.20, the S&P 500 grew 0.54% to 2,690.16 and the Nasdaq Composite Index improved 0.84% to 6,994.76.
Investors' optimism for the tax reform bill that promised a lower corporate tax rate continued from Friday through trading on Monday as the U.S. Congress moved closer to consensus. Members of the Republican Party continued to fall in line to support the bill, and the Senate is scheduled to vote on the new version Tuesday. A bill could make its way to President Donald Trump's desk by the end of the week. Investors were so excited about the prospects of tax reform that the Nasdaq hit a new high of 7,000 during intraday trading.
The tax bill could be a boost to banks, although the final proposed version includes a provision that would end the deductibility of premiums paid by the largest banks to the Federal Deposit Insurance Corp. If passed, the bill would no longer allow any bank with more than $50 billion in total assets to deduct payments that support the FDIC's deposit insurance fund, a pool of money used by the regulator to pay back money lost by a failing financial institution, and would apply to taxable years beginning after Dec. 31, 2017.
JPMorgan Chase & Co. grew 0.77% to $106.96, Citigroup Inc. improved 1.20% to $75.67, Bank of America Corp. rose 1.52% to $29.48 and Wells Fargo & Co. expanded 1.75% to $60.92.
Governors at various Federal Reserve banks issued contradicting assessments of the U.S. economy and the potential impact of future interest rate increases. San Francisco Fed President John Williams, who will be a voting member of the Federal Open Market Committee next year, told The Wall Street Journal that the economy has "very good momentum" heading into 2018 and suggested that additional rate hikes next year would be reasonable. He added that it "seems like a reasonable view" to expect perhaps three rate hikes in 2018 and then two or three in 2019, given a strengthening economy and his view that inflation will increase at a faster pace.
His comments were in contrast to Minneapolis Fed President Neel Kashkari, who said he voted against a Federal Reserve interest rate hike partly because of the yield curve's flattening in recent weeks, in comments made Dec. 18. Kashkari has dissented on the Federal Open Market Committee's three rate hikes this year and said in a statement that he has continually raised concerns that inflation has remained too low. Now, he said, recent trends in the yield curve also have his attention.
The banking world mourned the death of longtime M&T Bank Corp. Chairman and CEO Robert Wilmers, who died at home late Dec. 16 at the age of 83. In accordance with its succession plan, M&T's board named lead outside director Robert Brady nonexecutive chairman, effective immediately. Vice Chairmen Richard Gold, René Jones and Kevin Pearson maintain responsibility for the bank's day-to-day operations. Shares increased 1.73% to $173.86.
Equity Bancshares Inc. announced that it would buy two banks at once, adding $440 million in assets, in an effort to gain scale and expand its central U.S. footprint. Shares improved 0.09% to $35.13.
Hancock Holding Co. unit Whitney Bank agreed to buy Capital One NA's bank-managed high-net-worth individual and institutional investment management and trust business. Hancock rose 1.50% to $50.75.
Paoli, Pa.-based Malvern Bancorp Inc. said the filing of its annual report on Form 10-K for the fiscal year ended Sept. 30, 2017, will be delayed because the company needs more time to complete some parts of the report. In late November, the company disclosed that it was restating its financial reports over a tax computation error. Shares expanded 0.90% to $27.90.
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