The Dow hit yet another landmark level on Tuesday, breaching the 23,000 barrier for the very first time to create a new intraday record. The blue-chip index ended the trading day marginally below this mark, closing at 22,998. But even so, it serves to illustrate that things haven’t been this good for blue-chips for quite some time.

The current administration’s tax reform and deregulation proposals and sustained strong earnings performance are the factors powering this ascent. Such factors are unlikely to disappear in the near term, which makes it imperative to pick up some solid Dow components which are also slated to outperform their earnings estimates.

Trump’s Tax, Deregulation Proposals Spark Enthusiasm

This is a crucial week for the Trump administration with the Senate poised to consider a budget resolution. Earlier this month, the House of Representatives passed a $4.1 trillion 2018 budget legislation, representing the first definitive move toward tax reforms. This was a big victory for Trump who unveiled his much-touted tax plan at the end of September. Among its key proposals is a reduction in the rate of corporate tax rate from 35% to 20%. Several tax-related concessions are also targeted at individuals.

This is one of the primary factors driving markets higher at this point. Additionally, Trump has stated that he wants to do away with nearly 75% of all governmental regulations during this term as President. It is widely expected that the financial sector will be one of the major beneficiaries of such changes. Even sectors which have come up for criticism from a wide range of the political spectrum, such as healthcare, could benefit if some regulations are abolished.

Strong Earnings Streak Likely to Continue

Despite a slow but steady start to the third quarter earnings season, hopes remain high that the favorable momentum that has been on display over the last few quarters will get reconfirmed in this earnings season as well. Looking at the Q3 earnings season as a whole, as of Oct 16, we had received results from 33 S&P 500 index members that combined account for 10.6% of the index’s total market capitalization.