Expecting a big boost in S&P 500 components from a Trump administration tax cut? Hold your horses.
The average effective tax rate among S&P companies that had posted calendar fourth-quarter results as of Friday was 24.11 percent — well below the current corporate rate of 35 percent — according to data compiled by The Earnings Scout, a corporate earnings analysis firm.
"The oomph on that may not be as big on the market" as some investors think, said Nick Raich, CEO of The Earnings Scout.
U.S. equities popped to record-high levels after President Donald Trump said last Thursday that his administration will be announcing a "phenomenal" tax plan over the next two or three weeks. "Lowering the overall tax burden on American business is big league ... that's coming along very well," he said at a meeting with airline executives.
Trump has said that he plans to slash corporate taxes from 35 percent to somewhere between 15 and 20 percent. However, none of the S&P's 11 sectors averaged an effective tax rate higher than 31.08 percent — the energy sector, which includes many companies that reported losses, actually averaged a tax refund.