Earnings could keep the momentum going Wednesday, as markets await a much-heralded tax plan from the White House.
There was some trepidation that the plan, touted by President Donald Trump as "massive," could be a letdown after hyped-up expectations. Stocks soared Tuesday and bond yields rose ahead of the tax plan and as it appeared Congress will act on the budget in time to avoid a shutdown of the government later this week.
"I don't think much of the move is related to renewed optimism over the tax plan," said Mark Cabana, head of U.S. short-rate strategy at Bank of America Merrill Lynch. "There's still an expectation that there's a long way to go on this plan.
"We expect to see essentially the outlines of the broad strokes they would like to have, but not too
But earnings alone won't carry the market, and if there are a few big misses in the mix, it could trigger profit-taking.
"It will only take disappointment from one or two household names to tip over the apple cart," said Art Hogan, chief market strategist at Wunderlich Securities.
He said the tax plan should be neutral unless it is not received well or there is some new feature the market views as negative.
"It wouldn't take much commentary from the deficit hawks to say it's not passable," said Hogan. "It just feels like after two powerful rallies we're due for a reset."