US pre-open: Stocks to make solid gains as investors cheer passing of US tax reform bill
US futures pointed to healthy gains at the open on Monday as investors welcomed news that the Senate Republicans have passed the tax reform bill.
At 1215 GMT, Dow Jones Industrial Average futures were up 0.9%, while S&P 500 and Nasdaq futures were 0.6% and 0.5% higher, respectively.
The US Senate voted 51 to 49 on Friday to pass a bill that will implement a slew of changes to the US tax code which will include a big cut in corporation tax.
Rabobank said: "As its stands there is still a lot of work to be done in Washington to close the gaps between the two tax bills delivered by Congress and the Senate. Until it is complete it will be difficult for economists to fully analyse the economic impact of the tax changes. That said both bills include a reduction in the corporate tax rate to 20% from 35%, albeit that Congress's bill favours an immediate implementation and the Senate bill endorses a delay.
"According to our modelling of a change to US corporation tax, in the case of an immediate implementation of the cut (in Q1 2018), US growth is likely to peak at 4.5% quarter-on-quarter seasonally-adjusted annual rate during the course of 2018 and the boost is set to last around two years. If there is a delay, a growth slowdown could occur next year on the back of higher long-term interest rates and then the boost to growth could be more marked in 2019, though we still expect the impact to last around two years."
In corporate news, shares in General Cable surged in pre-market trade after it agreed to be bought by Italian cable maker Prysmian Group in a deal that values the company at around $3bn including debt and other liabilities.
Elsewhere, drugstore chain CVS Health agreed to buy health insurer Aetna in a deal worth around $69bn.
Hartford Financial was likely to be in focus after agreeing to sell its run-off-life and annuity businesses, Talcott Resolution, to a group of investors in a deal valued at $2.05bn.
On the data front, factory orders for October are due at 1500 GMT.