Earlier in the day, the Senate Budget Committee voted along party lines (12-11) to advance the tax bill through to the Senate floor.
If the tax bill were to pass, there are few companies that would stand to gain as much as banks, and Bank of America in particular. As the nation's second-biggest bank by assets, Bank of America generates more net income than all but a handful of companies in the United States.
Over the last 12 months, the Charlotte, North Carolina-based bank has earned a total of $20.4 billion. That ranks it sixth on the S&P 500 in terms of total earnings. It's surpassed by only two banks (JPMorgan Chase and Wells Fargo) and three technology companies (Apple, Microsoft, and Alphabet).
With this in mind, it makes sense that Bank of America's stock would outperform the broader market as optimism toward the tax bill climbs. The S&P 500 (SNPINDEX:^GSPC) finished the day up by about 1%, which was far short of bank stocks.
It still remains to be seen whether the tax bill makes it through the full Senate, but there are growing reasons to think that it will. Most importantly, a number of Republican senators who have expressed concern about the bill are now beginning to soften up.
Sen. Bob Corker from Tennessee has been worried about the impact of the bill on the debt and deficits. To assuage these concerns, he and his colleagues are working on a plan that would kick in after five years if the impact on the debt and deficits is too exaggerated.
"I think we've come to a pretty good place," Corker said. "We've got an outline of an agreement at every level that matters in the Senate to make it happen."
Meanwhile, Sen. Susan Collins from Maine is working on a way to neutralize the impact of eliminating the individual mandate, which penalizes taxpayers who don't carry health insurance. Collins intimated that she has an agreement with Republican party leaders to pass a bill addressing her concerns prior to passage of the tax legislation.
Furthermore, although Sen. Ron Johnson from Wisconsin has also expressed reservations about the bill, focusing his criticism on the proposed rate on tax pass-through business entities, he also voted in favor of advancing the bill out of the Senate Budget Committee.
There are a handful of other Republican senators who have gone on record with concerns as well, but if these three issues are resolved, then it seems increasingly likely that the tax bill will succeed, pushing the corporate tax rate down from 35% to 20%, a coup for corporate America.
And if that were to happen, few companies would benefit as much as Bank of America, which explains why its stock soared on Tuesday.