Stocks Are Already Counting on a Tax Cut for 2018

Wall Street has a lot more riding on Donald Trump's tax cuts than many realize.

Precisely how much has been a question since at least the beginning of the summer and as far back as the start of the market rally right after the election. The answer for a while seemed to be "not much." Corporate profits were rising on their own for the first time in two years, and almost no one on Wall Street had baked tax cuts into their 2017 earnings estimates. But the answer has changed as 2018 gets closer -- when tax cuts do appear to be part of the earnings math -- and as the market climbs on the Trump administration's more detailed plan. For example, Morgan Stanley's chief U.S. equity strategist, Mike Wilson, says S&P 500 companies will not be able to hit their current 2018 estimates without some sort of tax cut.