If the market gets clarity this week on how and when tax reform will play out, some analysts say stocks could be vulnerable to a sell-off.
"This carrot that's out there is tax reform," said Bruce Bittles, chief investment strategist at Baird. "I think markets are centered around the likelihood of a tax cut and after that's out, then markets are vulnerable because of high valuations and the fact that a lot of investors are loaded up after six years of a bull market," he said, noting that in his view, the current bull market rally began in 2011.
According to reports this week, President Donald Trump still wants to lower the corporate tax rate to 15 percent, even if it expands the federal deficit. He is expected to
Proposed cuts to the high 35 percent U.S. corporate tax rate have been a major factor behind stocks' postelection surge to record highs. So far, equities have held near those levels. The potential of missing out on a boost from tax reform would be great.