All of those experts on Wall Street who thought the market rally wasn't dependent on tax reform might want to spend some time this week giving it a little more thought.
The stock market showed last week that, as a matter of fact, it actually is sensitive to what's happening with the economic agenda in Washington. The week ahead points to more of the same.
The tax reform tussle
Stocks closed last week broadly lower as the prospects for tax reform dimmed.
To be sure, it was a modest drop, and at least for now one has to be careful to read too much into what's happening. But the signs are troubling that congressional lawmakers could snatch defeat from the jaws of victory.
If things progress on their current course, the GOP will pass largely along party lines an unpopular package of reforms that party officials are now acknowledging could result in a tax increase for some middle-income payers.
In the week ahead, Congress will be busy at work massaging the numbers, with the Senate preparing a counterproposal to the House's hopes to lower corporate and personal taxes while removing deductions for state and local taxes and mortgage interest.
It's possible before the week is through, the Senate could release its plan and the House could make an official vote on its plan.
Moment of truth for GE
General Electric is in the midst a spectacular fall from cornerstone of corporate America to a company in disarray, with a plummeting stock price and a scramble at the top to right the ship.
What could be the second-biggest market story of the week happens right off the bat, when GE holds its annual investor meeting Monday morning. Investors will be demanding answers to how executives plan to reroute a company that has seen its share price tumble 33 percent over the past year, a period during which the Dow industrials, the blue-chip index of which GE is a member, have climbed more than 24 percent.
One of the biggest issues to watch is what GE does with its dividend.
For generations, the company has been known as one of the best friends income investors could have. Now, analysts and even some investors are clamoring for GE to put its cash to work otherwise. The dividend stands at 96 cents and the dividend yield at 4.69 percent, its highest in at least 30 years, not including the financial crisis.
As far as individual company stories go, there won't be a bigger one this week than General Electric.
The data picture
If CNBC's GDP Rapid Update tracker is accurate — and it's been pretty good so far — economic growth in 2017 should come in around 2.6 percent on average, and 3.1 percent if you throw out the first quarter hangover.
That gets you in the ballpark of where the Trump administration said things would be, an estimate that continues to meet derision from much of the economic community, and the president's political foes.
In the week ahead, there will be some pretty important data points, with the most important ones centering on the inflation outlook.
On Tuesday, there's the producer price index as well as the small business confidence reading; Wednesday will see retail sales and the closely watched consumer price index; Thursday holds import and export prices, industrial production, homebuilder sentiment and the Philadelphia Federal Reserve manufacturing reading, while the week wraps with housing and building permits.
That's a big week, with a bevy of potentially market-moving numbers.
Earnings season, meanwhile, is winding down, and it's been a good one. Corporate profits in the are on track to grow a healthy 6.1 percent as nearly three-quarters of the index beat Wall Street earnings estimates, according to FactSet.
On the earnings calendar, Home Depot and TJX both report Monday; Target and Cisco are on tap Tuesday, and it's Best Buy, Wal-Mart and Viacom on Wednesday.
The last word
In the weeks ahead, you'll start to hear more forecasts for 2018. As a matter of course, it's usually a good idea to take these things as educated guesstimates. Frankly, most of them will be wrong, if not in terms of direction then at least as to what will be the chief market movers in the year ahead.
One of the market's leading bulls, Piper Jaffray, was first in line last week with a forecast that the S&P 500 will be about 10 percent higher from current levels when 2018 comes to a close.
We wind up today with some cautionary thoughts from Brad McMillan, chief investment officer at Commonwealth Financial Network:
"I am on record as saying a recession in 2018 is quite possible. I don't necessarily see this as a base case, with the recent positive developments we have had. But it certainly is a real possibility, which rises substantially into 2019. Even if we see growth continue, 2018 is going to be substantially more challenging than 2017 has been. This is something that is both very probable and predictable.
"Take the lesson of yesterday—that confidence can go down as well as up—and keep it in your mind when you think about 2018. Don't be surprised, like the market, at things we can see coming."