There’s one other thing that the tax reductions did: They raised corporate profits.
The stock market was wildly overvalued coming into this year. Those extra profits that companies have been able to keep thanks to the feds’ generosity have made stocks a little less expensive relative to their earnings.
And that seems to have surprised the people on Wall Street paid to predict corporate profits.
According to David Aurelio of Thomson Reuters, of the 440 companies in the S&P 500 that have reported second-quarter earnings to date, 78.6 percent have reported results above expectations. And 16.4 percent of earnings are below what were expected.