You can thank Sen. John McCain (R-AZ) for Thursday’s rally. OPEC also deserves a nod.

The maverick Senator announced Thursday that he supported the GOP’s sweeping package of tax cuts, increasing the legislation’s odds of passage. A marathon debate over the bill is currently underway in the Senate.

Also on Thursday, OPEC and its partners met in Vienna and agreed to prolong the existing output curbs until the end of 2018. They were set to lapse in March.

The two news developments acted like a double shot of steroids for stocks. All three indices closed sharply higher. The Dow Jones Industrial Average rocketed past 24,000 for the first time.

Below, I examine the tax bill. But first, let’s talk about energy.

Sheikh, rattle and roll…

OPEC production cuts have been in place since the start of 2017. They’ve helped halve global oil inventories. Energy prices have bounced back from their long recession. But energy rallies have faded before. Bearish inventory reports show the glut persists.

Cheating could weaken Thursday’s deal. That would send oil prices falling again. Many energy companies remain indebted. They’re vulnerable to oil price gyrations. That’s why the news from Vienna was welcomed.

In advance of Thursday’s meeting, the market’s biggest fear was that OPEC would abandon its production cuts and let member countries produce as much oil as they want. This didn’t happen.

The broad based stock market rally on Thursday is further proof that markets climb a wall of worry. And yet that worry lingers. Energy volatility continues to roil markets. How did we get into this mess?

In 2014, Saudi Arabia started a price war by throwing open production. The desert kingdom created a glut to push down oil prices. Their goal was to shake up shale producers in the U.S.

With trillions in cash on hand, the Saudis thought they could outlast competitors. The OPEC leader figured it had the resources to wait until rivals went bust. With the competition on the ropes, Saudi Arabia would curtail production to drive up prices again. They would grab market share while prices were high.

That was the plan, anyway. Wars often follow unintended paths. This war got out of control.

Shale producers rattled the sheiks by perfecting hydraulic fracturing (aka “fracking”). This method can cheaply tap previously inaccessible oil. Fracking operations make money, even when oil prices are low. Saudi production costs are higher. It was the Saudis who almost rolled over and went bankrupt.

The Saudi price war was one of the greatest economic blunders in modern times. OPEC is trapped in a no-win situation. U.S. shale producers benefit whether the cartel extends the cuts or abandons them.

Energy supply and demand are out of whack. But OPEC’s embrace Thursday of an extended production cut helps restore balance.

The price of crude hovers above $50 per barrel, the breakeven point for energy firms. The U.S. benchmark West Texas Intermediate (WTI) on Thursday stayed flat at $57.30 per barrel. The international benchmark, Brent North Sea crude, gained 9 cents, or +0.14%, to settle at $62.62/bbl. WTI has rebounded about 123% since hitting a low of $26.21 a barrel in early February 2016.

Despite Thursday’s agreement, the energy markets remain dicey. Demand isn’t strong enough to mop up the excess crude that’s sloshing around the world.

Saudi Arabia faces an identity crisis. The country seeks to diversify its economy. The House of Saud is pouring billions into innovative firms that aren’t involved in fossil fuels. These investments are tailwinds for the technology sector. Tech stocks were among the biggest gainers Thursday.

Congress and your nest egg…

Now let’s look at Thursday’s other big story — tax reform.

Proposals under consideration on Capitol Hill would represent the biggest change to the tax code since 1986.

The bill wouldn’t just cut taxes; it would change the American way of life.

The Senate is preparing to vote. Details are still getting hammered out. The corporate tax rate would get cut; the only question is by how much. The current rate of 35% could get slashed to as low as 20%. The top rate on “pass through” business income reported and taxed on individual returns could drop from 39.6% to 25%.

But many tax breaks and deductions popular with individual investors are in the cross hairs. For example, under consideration is a curb on pretax 401k catch-up contributions.

For now, Wall Street is thrilled over the prospects of lower business taxes. The Dow in November posted its eighth straight monthly gain, its longest such streak in 22 years.

Thursday Market Wrap

• DJIA: +1.39% or +331.67 points to close at 24,272.35
• S&P 500: +0.82% or +21.51 points to close at 2,647.58
• Nasdaq: +0.73% or +49.58 points to close at 6,873.97

Thursday’s Big Gainers

• Kroger (NYSE: KR) +6.19%

Grocery chain posts blow-out Q3.

• HCA Healthcare (NYSE: HCA) +6.06%

Analysts upgrade managed care firm.

• Synopsys (NSDQ: SNPS) +4.16%

Software firm’s Q4 beats estimates.

Thursday’s Big Losers

• Barnes & Noble (NYSE: BKS) -11.85%

Beleaguered bookselling chain posts huge Q2 loss.

• Juniper Networks (NYSE: JNPR) -5.93%

Router maker plunges after Nokia (NYSE: NOK) denies merger rumors.

• Guidewire Software (NYSE: GWRE) -3.28%

Weak guidance batters shares.

Letters to the Editor

In response to my coverage on Wednesday about the continuing woes of Sears Holdings (NSDQ: SHLD), I received this reader email:

“The last few times I went to Sears to buy something out of necessity, I was pressured to take out a new credit card, even though I was paying for my purchases with a SEARS credit card! The clerk told me it was an upgrade on my current card, and I would get a 10% discount on my purchase if I signed up.

She lied, it was a NEW card, which I had to later cancel since I didn’t want or need it. I didn’t fall for this scam the next couple of the times I shopped Sears. Sears management has destroyed customer trust; their sales tactics are underhanded. No surprise that they’re going under.” — Gerald T.

Thanks for your feedback, Gerald. Retail was the big topic this week, until tax reform grabbed the headlines.

Got any questions about tax reform and how it might affect you? Now’s the time to get your tax ducks in a row. Drop me a line and I’ll answer your query: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and chief investment strategist of Breakthrough Tech Profits.