Bank Stocks Lift Dow To New High On Tax Bill Hopes

One day after experiencing major gains, shares of banking giants—including Citigroup (NYSE:C) , Bank of America (NYSE:C) and JPMorgan Chase (NYSE:JPM) —soared again on Thursday, with some reaching new highs as the Republican’s plan for a tax overhaul inches closer to reality.

On Thursday, Sen. John McCain announced that he would support the Republican’s $1.4 trillion tax cut plan, which is currently making its way through the Senate.

"After careful thought and consideration, I have decided to support the Senate tax reform bill," McCain said in a statement. "I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families."

Senate Republicans need 50 votes in order to pass their much-talked-about and controversial tax plan. But, with no Democrats projected to vote for the bill, only two Republicans can vote against the bill for it to be passed. As one of the last Republican holdouts, McCain’s announcement is vitally important.

The Republican tax bill aims to cut the corporate tax rate from 35% to 20%, which would theoretically help almost every company grow their bottom lines. In turn, investors rewarded banking stocks, which stand to benefit greatly from the 10-year, $1.5 trillion GOP tax cut plan.

Shares of Citigroup, JPMorgan Chase, and Bank of America all jumped to new 52-week highs on Thursday. Fellow banking giants Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS) also surged, with Goldman climbing nearly 3%.

This substantial movement from some of the biggest players in the S&P 500 helped the index gain about 0.7% on the day. The Dow, of which JPMorgan and Goldman Sachs are components, hit 24,000 for the first time ever, jumping more than 300 points in the process.

On top of that, banking industry investors also seem to be happy with Fed chair nominee Jerome Powell’s recent testimony, as he inches closer to officially replacing Janet Yellen as the leader of the nation’s central bank.

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