After an early move to the upside, stocks have turned mixed over the course of the trading session on Monday.
"We think the chances the tax bill will be finished by the end of 2017 have risen to around 65 percent (up from 50 percent before the Senate vote), and our estimate of the chances of the bill passing regardless of the timing are now in the 80-85 percent range", analysts with Keefe, Bruyette & Woods said in a research note. If profits do accelerate further, it would help allay worries that the record-high stock market has climbed too far, too quickly. Eastern time. It had been up as much as 0.9 percent in the morning.
By mid-afternoon, the Dow Jones Industrial Average rose 199.59 points, or 0.82 percent, to 24,431.18, the S&P 500 gained 14.62 points, or 0.55 percent, to 2,656.84 and the Nasdaq Composite dropped 11.57 points, or 0.17 percent, to 6,836.02.
Slightly more stocks rose than fell on the New York Stock Exchange.
Along with financial firms, smaller companies look to be some of the biggest winners from the tax overhaul because they generally pay higher rates than their bigger rivals.
The stocks helped the consumer discretionary index .SPLRCD gain about 1.5 percent.
The pullback by the Nasdaq may reflect concerns that technology companies will not benefit as much from the tax cuts.
Cuts to the corporate tax rate could boost earnings growth and help the long US stock rally keep going, investors and analysts say.
The prospect of tax cuts, however, saw demand for tech stocks fade amid expectations that the potential tailwinds of tax cuts to the sector pale in comparison to that of other sectors such as energy.
Technology .SPLRCT has been the best performing S&P index this year, rising about 34 percent.
"The big story is indeed the tax reform passage".
With the vote to approve the bill, lawmakers from the Senate and House will need to go to conference to work out differences in the bills passed by the two chambers.
Among other movers, Aetna shares rose 0.7 percent after drugstore chain operator CVS Health agreed to buy the health insurer for $69 billion in the year's largest corporate acquisition. CVS fell $3.48 or 4.6 percent, to $71.64, and Aetna dipped $1.85, or 1 percent, to $179.46.
Despite the turbulence, it's clear Wall Street loves the tax overhaul making its way through Congress.
Friday is also the day when the government will release its monthly jobs report.
The U.S. Federal Reserve will nearly certainly raise interest rates later this month, while markets are pricing roughly another two hikes in 2018.
The flip side is that the cuts will add to a $20 trillion US debt pile and may increase the chances of more aggressive near-term rate rises in the world's largest economy.
And hanging over everything in Washington is the investigation that continues into Russia's involvement with last year's presidential election. President Donald Trump said in a post on Twitter.
France's CAC 40 jumped 1.4 percent, and Germany's DAX surged 1.5 percent.
Asian markets were mixed.
The Nasdaq lost more than 1% as previously hot tech stocks like Netflix, Amazon and Nvidia cooled off. Two-year yields matched Friday's nine-year high while 10-year yields rose three basis points.
The dollar rose against a basket of currencies after the tax package moved forward. The euro fell to $1.1855 from $1.1893, and the British pound rose to $1.3471 from $1.3468.
On commodities, Brent crude futures slipped 0.7 percent, pressured by signs of increasing supply from USA shale producers. Brent crude, the worldwide standard, fell $1.28 to $62.45 a barrel in London. Gold for December delivery fell 0.4% to $1,274.30 an ounce.