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Wall Street celebrates historic Senate tax vote

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Dow has milestone year in 2017

Wall Street is very, very happy that the Senate has passed a bill that would massively cut corporate taxes.

The Dow soared nearly 300 points to all-time highs on Monday morning following the Senate vote over the weekend. The S&P 500 also opened at a record high.

The burst of buying shows that Wall Street's Michael Flynn freakout from Friday is over. The Dow had tumbled 350 points after an incorrect ABC News report about Flynn. But by Friday's closing bell, the Dow was down just 42 points amid enthusiasm for renewed progress on the tax deal.

Investors love the tax overhaul because it could save companies tons of money on what they owe Uncle Sam. Both the House and Senate bills, which now have to be reconciled, call for slashing the corporate tax rate to 20% from 35%. They would also offer a tax break for companies to bring foreign profits sitting overseas back to the United States.

Related: The real reason Wall Street is euphoric over tax plan

While Republican leaders promise the tax plan will unleash huge economic growth, spur hiring and lift wages, Wall Street and many economists are far less certain of such an outcome.

But investors can win, even if Main Street doesn't. Markets are betting companies will use their spare cash to help Wall Street by ramping up stock repurchases and bolstering their dividends. Both moves could keep the stock market soaring, even if jobs and wages don't take off as well. The Dow, up an incredible 6,000 points since President Trump's election, smashed through the 24,000 level last week.

The U.S. Tax Reform Fund (TAXR), an ETF that holds stocks that could benefit from the tax overhaul, soared nearly 2% on Monday.

But not every stock is getting a boost. The Nasdaq traded flat to slightly negative as previously hot tech stocks like Netflix (NFLX, Tech30), Amazon (AMZN, Tech30) and Nvidia (NVDA, Tech30) cool off. It looks like a continuation of last week when investors sold high-flying tech stocks to look for bargains in retail and elsewhere.

Wall Street also has some mega merger news to cheer. CVS (CVS) unveiled a $69 billion agreement to acquire Aetna (AET), which would transform the health care industry. 21st Century Fox (FOXA) and Disney (DIS) have also resumed talks over a deal, The Wall Street Journal reported.



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