Stock climb on expectations of lower US corporate taxes

Stocks rose Monday on expectations that lower taxes will help corporate profits pile up even higher.

Congress moved to the precipice of overhauling the U.S. tax system over the weekend, after the Senate narrowly approved its package of cuts.

Lower corporate tax rates would help boost profits for companies, which have already been reporting resurgent gains this year thanks to a global economy that finally seems to be improving in sync. And if profits do indeed accelerate further, it would help allay worries that the record-high stock market has climbed too far, too quickly.

KEEPING SCORE: The Standard & Poor’s 500 index rose 14 points, or 0.5 percent, to 2,656, as of noon Eastern time. It had been up as much as 0.9 percent earlier in the morning.

The Dow Jones industrial average climbed 240, or 1 percent, to 24,471. The Nasdaq composite was the laggard and dipped 25 points, or 0.4 percent, to 6,823.

TAX BENEFICIARIES: Smaller companies look to be some of the biggest winners from the tax overhaul because they generally pay higher rates than their bigger rivals. The small-cap Russell 2000 index gained 13 points, or 0.9 percent, to 1,550.

Other likely winners include telecoms, which pay some of the highest effective tax rates among the big companies in the S&P 500. Telecommunication stocks jumped 2.2 percent for the biggest gain of the 11 sectors in the index.

Analysts also expect banks to be winners from the tax overhaul, and financial stocks in the S&P 500 climbed 2 percent.

Technology companies, meanwhile, will likely get less of a boost. They already were typically paying the lowest effective tax rates of the 11 sectors in the S&P 500, analysts said.

Tech stocks in the index were down 1.3 percent, well behind the rest of the market. It’s a very different position for the sector, which has led the market for most of this year and has nearly doubled the performance of the S&P 500.

HEALTH DEAL: Health care stocks in the S&P 500 were close to flat after CVS Health offered $69 billion to buy insurer Aetna, a combination that would touch almost every facet of patients’ health care needs.

CVS fell $4.16, or 5.5 percent, to $70.96, and Aetna dipped 84 cents, or 0.5 percent, to $180.47.

Health care stocks overall in the S&P 500 were virtually unchanged.

BUSY WEEK: Congress still has a packed schedule, even after the Senate pushed through its tax-overhaul vote a couple hours after midnight on Saturday morning. Washington faces a deadline on Friday…

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