Individual tax rates are also expected to be cut, with the focus on the middle class. But the tax bill must still make it through Congress, and that may not be an easy process, as efforts to pass a new health-care bill have shown. The fate of that effort was unclear late Friday when Sen. John McCain said he would not vote in favor of the Republican bill and that he hopes to work with Democrats on a bipartisan plan.
"While Congress has shown reticence to pass any bills, there's more support for tax cuts than there is for health care. Details around the edges are going to be that it comes out and saves $1.5 trillion over 10 years and will not be revenue neutral and it doesn't take away popular deductions," said Art Hogan, chief market strategist at Wunderlich Securities. "The market is going to see for the first time if this new administration can get an agenda item accomplished."
Goncalves said the tax announcement should be positive but warned that if bond yields run up too much or too quickly on the tax news, that could stall out an equities rally.
Treasury yields in the past week were higher, after the Federal Reserve Wednesday announced that it would buy fewer Treasury and mortgage securities and gradually increase that amount, in an effort to shrink its $4.5 trillion balance sheet. The Fed also retained its near-term forecast for another interest rate hike this year and three more next year, boosting market expectations for a December rate hike well above 60 percent.
Fed Chair Janet Yellen, who briefed media after the Fed meeting, speaks again on Tuesday as the keynote luncheon speaker at the National Association of Business Economists meeting.
"We're shifting the focus away from the monetary policy side of things to fiscal policy. Though Yellen will be important, it most likely will be more about any kind of good news on getting details on tax reform," Goncalves said. He said he is watching Yellen to see if she discusses inflation, which the Fed has said is being kept low by transitory factors.
CPI showed inflation picked up in late August due to the influence of hurricanes, after running at a low level for the past several months.
There is an important piece of inflation data Friday, the personal consumption expenditure prices data. Core PCE is expected to rise by 0.2 percent in August, after a 0.1 percent gain in July. There is also personal spending and consumption data, expected to show a gain of 0.2 percent in spending, and a gain of 0.4 percent in income.
"I would expect it to move away from its 1.4 percent trend it's been in for the summer here … probably move up to 1.5 to 1.6 percent year over year," Steve Rick, chief economist at CUNA Mutual Group.
He said there could be a pickup in spending because homeowners in hurricane-hit areas stocked up on goods from hardware stores and elsewhere ahead of the storms. Hurricane Harvey hit Texas in the last several days of August, while Irma slammed Florida in September. Hurricane Maria left a trail of destruction across Puerto Rico in the past week, and the island is now without water and power.
But the August number will not show much storm impact. There has been an elevation in unemployment claims in the last several weeks, and that could continue.
"It probably will have more impact on the income number than the spending number," Rick said.
He said consumer confidence Tuesday and consumer sentiment Friday could show a trend higher. "The stock market keeps hitting record highs ... the market and real estate ... that's the biggest driver of why people have confidence and feel good," he said.
There are several earnings in the week ahead, including the cruise line Carnival, which is expected to discuss the impact of hurricanes Tuesday when it releases earnings. Nike and Micron also report that day.
Fed speakers are back on the speaking circuit after this week's meeting. Besides Yellen, there are more than a dozen speaking events.
What to Watch
Earnings: Red Hat, Ascena Retail, Synnex
8:30 a.m. New York Fed President William Dudley on workforce development
9:00 a.m. European Central Bank President Mario Draghi speaks in Brussels
12:40 p.m. Chicago Fed President Charles Evans on economy
6:30 p.m. Minneapolis Fed President Neel Kashkari in North Dakota
Earnings: Carnival, Nike, Micron, FactSet, Darden, IHS Markit
9:00 a.m. S&P/Case-Shiller home prices
9:30 a.m. Cleveland Fed President Loretta Mester
9:45 a.m. Services PMI
10:00 a.m. New home sales
10:00 a.m. Consumer confidence
10:30 a.m. Fed. Gov. Lael Brainard
12:00 p.m. Fed Chair Janet Yellen keynote at NABE conference
12:30 p.m. Atlanta Fed President Raphael Bostic
Earnings: Jabil Circuits, Pier 1 Imports, Actuant, Progress Software, Thor Industries
8:30 a.m. Durable goods
10:00 a.m. Pending home sales
2:00 p.m. Fed's Brainard
Earnings: Accenture, Conagra, KB Home, H&M, McCormick, Vail Resorts, Blackberry, RiteAid
8:30 a.m. Initial claims
8:30 a.m. Real GDP Q2
8:30 a.m. Advance economic indicators
9:45 a.m. Kansas City Fed President Esther George
10:15 a.m. Fed Vice Chair Stanley Fischer at Bank of England conference
1:30 p.m. St. Louis Fed President James Bullard
1:30 p.m. Atlanta Fed's Bostic
7:00 p.m. Boston Fed President Eric Rosengren
8:30 a.m. Personal income/spending
8:45 a.m. Chicago PMI
10:00 a.m. Consumer sentiment
11:00 a.m. Philadelphia Fed President Patrick Harker