U.S. stocks climbed Wednesday as smaller companies soared following a report that showed business investment climbed in August. Investors also hoped stocks will benefit from tax cuts proposed by President Donald Trump and congressional Republicans.
The Labor Department said orders for long-lasting manufactured goods rose, and a gauge of business investment climbed for the second month in a row.
“We’ve been waiting for that,” said Kate Warne, an investment strategist for Edward Jones, of the recent improvement. “Business spending has been relatively weak,” with spending by consumers keeping the economy afloat.
Smaller, domestically-focused banks and technology and industrial firms made especially large gains, and the Russell 2000 index of smaller-company stocks made its biggest gain since March.
“A corporate tax cut tends to be better news for smaller companies because they don’t have as many ways to reduce their tax rate,” Warne said.
The Standard & Poor’s 500 index added 10.20 points, or 0.4 percent, to 2,507.04. The Dow Jones industrial average rose 56.39 points, or 0.3 percent, to 22,340.71. The Nasdaq composite leaped 73.10 points, or 1.1 percent, to 6,453.26.
The Russell 2000 did even better and continued to set records. It gained 27.95 points, or 1.9 percent, to 1,484.81. The Russell has jumped more than 9 percent since mid-August.