Tags: jeremy siegel | rates | stock | market

Siegel: Rising Rates, Political Uncertainties Will Hurt Stocks

(Matt Rourke/AP)

By    |   Wednesday, 20 December 2017 02:16 PM

Economic guru Jeremy Siegel is warning savvy investors to be on guard now that the sweeping tax reform plan will almost certainly become law.

Investors have pushed stocks higher on anticipation of tax reform, but a backlash for the market may be looming, Siegel warned.

"I'm very positive on the tax plan but it's buy on the anticipation, sell on the news," the Wharton School finance professor predicted to CNBC.

"All the good things about the corporate tax plan have been built into the rally we have seen for the last two months and I'm not sure how much else there is really going to be."

The Dow Jones industrial average is approaching 25,000 after climbing more than 5,000 points this year.

Ironically, Wall Street’s main indexes were flat at midday Wednesday, taking a breather after a month-long rally and as U.S. Treasury yields rose as a bill to cut $1.5 trillion in taxes progressed toward the finish line.

The Republican-controlled U.S. House of Representatives gave final approval to a sweeping tax bill which will be the largest overhaul of the U.S. tax code in 30 years. The Senate has already voted in favor of the bill.

The proposed changes include cutting the corporate tax rate to 21 percent from 35 percent from Jan. 1, which could boost company earnings and pave the way for higher dividends and stock buybacks.

The S&P 500 has climbed about 4.7 percent since mid-November when the House passed the bill, led by a rally in sectors such as transport, banks and others that are expected to benefit the most from lower taxes.

Some market analysts say the market has already priced in the approval of the tax bill, Reuters explained.

“We rallied a lot on sort of a non-event and there is a little bit of head scratching about what’s really new that we should be rallying on,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

“There is no news to take us higher in terms of stocks, part of it could be rotation out of bonds and maybe some nibbling at stocks that perhaps people think will perform well in 2018.”

(Newsmax wire services contributed to this report).

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Wharton's Jeremy Siegel: Rising Rates, Political Uncertainties Will Hinder Stock MarketEconomic guru Jeremy Siegel is warning savvy investors to be on guard now that the sweeping tax reform plan will almost certainly become law.
jeremy siegel, rates, stock, market
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2017-16-20
Wednesday, 20 December 2017 02:16 PM
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