Dow 30,000: Why it Could Happen

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The Trump boom was alive and well in early 2018, as were calls for Dow 30,000.

In fact, many believed such a milestone could be met thanks to tax reform.

Ever since the passage of massive tax cuts, companies in the U.S. have already announced $171 billion worth of stock buybacks in early 2018.  That was a record-high and more than double the $76 billion that corporate America saw for most of 2017, according to CNN.  

That included the $22.6 billion buyback announced by Wells Fargo.

  • Amgen announced a $190 billion buyback.  
  • Alphabet announced a buyback of $8.6 billion.  
  • Visa announced a $7.5 billion program.  
  • eBay announced a $6 billion buyback.
  • Mondelez announced it would buy back $6 billion worth.
  • Lowe’s Companies announced it would buy back $5 billion.
  • Eastman Chemical announced a $2 billion buyback program.
  • WalMart announced a $20 billion buyback program, too.

Even Cisco, Pepsi and AbbVie announced a total of $50 billion worth of buybacks.

Many argued we could see even more buybacks, as companies repatriated cash.

In fact, according to Bank of America, S&P 500 companies could use repatriated profits to buy back another $450 billion worth of stock.  The hope is that this low repatriation rate will stimulate greater economic growth by encouraging businesses to invest some of the money currently being held overseas.

Even U.S. employees have been benefiting with many receiving bonuses.

  • Anthem offered $1,000 bonuses
  • Lowe’s confirmed plans to pay out $1,000 bonuses
  • Hostess gave employees $1,250
  • CVS is hiking wages and introducing paid parental leave
  • Boeing boosted its employee match program.

Individual and families will benefit, too.

  • Standard deductions will rise from $6,500 to $12,000 for individuals. They’ll increase from $13,000 to $24,000 for families.
  • The child-care tax credit will double from $1,000 to $2,000, as well.
  • As for state and local tax deductions, taxpayers can deduct up to $10,000 in state and local property, sales, or income taxes from their federal bill.
  • Interest on mortgages up to $750,000 will also be deductible, which is lower than the current cap of $1 million.
  • The current bill will also keep deductions for student loan interest and medical expenses.

While many argue that corporate America will benefit the most from tax reform, we can’t overlook the fact that everyday Americans would see incredible benefits, too.  And while not every one will see a tax cut most Americans will still benefit from an explosively thriving economy and stock market.

This is just part of the reason many analysts called for Dow 30,000 in early 2018.

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