GE slumps after earnings miss; Bank shares pop
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U.S. stocks rose on Friday, with major indexes trading at or near records after the Senate passed a budget blueprint for the next fiscal year, a move that is seen as paving the way for the tax reform many investors believe is vital to keeping the bull market alive.
What are stock-index futures doing?
The Dow Jones Industrial Average rose 63 points, or 0.3%, to 23,226. The S&P 500 gained 7 points, or 0.3%, to 2,569. The Nasdaq Composite Index rose 29 points, or 0.4%, to 6,634.6.
Both the Dow and the S&P hit intraday records in early trading, while the Nasdaq got less than a point short of its own all-time high.
All three indexes are on track for weekly gains, with the Dow up 1.5%, the S&P up 0.6% and the Nasdaq up 0.4%.
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The Dow and the S&P 500 are set to close out their sixth straight weekly gain, while the Nasdaq is on track for its fourth straight positive week. This is the longest stretch of weekly gains for the Dow since a seven-week rally that ended in December, and the longest for the S&P since a six-week stretch that ended in March.
What's driving markets?
Late Thursday, the Senate passed a budget blueprint for the next fiscal year (http://www.marketwatch.com/story/senate-republicans-approve-budget-proposal-clearing-path-to-tax-overhaul-2017-10-19), seen as clearing a hurdle to the Trump administration's goal of overhauling the tax code. The rally for stock markets since the surprise election of President Donald Trump has been driven in part by hopes that a Republican-led Congress will introduce lower taxes, seen as stimulating growth.
Trump lauded the 51-49 vote on Twitter, saying it would be the "first step toward massive tax cuts for the American people."
Bank stocks were among the beneficiaries of the news, with the Financial Select Sector SPDR (XLF) up 0.8%, nearing a 10-year high. J.P. Morgan Chase & Co. (JPM) rose 1% while Citigroup (C) was up 1%.
Meanwhile, Politico reported Thursday (http://www.marketwatch.com/story/trump-reportedly-leaning-toward-powell-for-fed-chairman-2017-10-19) that Trump is leaning toward Fed. Gov. Jerome Powell to replace Federal Reserve Chairwoman Janet Yellen when her term ends in February.
Yellen is on the Fed speaker list Friday, scheduled to talk about monetary policy since the financial crisis at the National Economics Association at 7:30 p.m. Eastern Time. Ahead of that, Cleveland Fed President Loretta Mester will appear on a panel discussion on regulation at Columbia University in New York at 2 p.m. Eastern. Mester isn't a voting member of the Fed.
The only data of note for Friday is a reading on existing home sales for September, due at 10 a.m. Eastern, with a reading of 5.3 million expected.
What are strategists saying?
"The move could allow Republicans to pass their proposed tax reform later this year or early next year, including a proposed $1.5 trillion tax cut. The next step is for the House of Representatives to take up the legislation, which could happen next week," said Marshall Gittler, chief strategist at ACLS Global.
"Action instead of gridlock and the possibility of tax cuts are likely to keep U.S. sentiment strong and U.S. stocks underpinned, which should allow the Fed to keep hiking rates," Gittler said in his note to clients Friday.
Which stocks are in focus?
Shares of General Electric Co.(GE) slumped 3% after the industrial conglomerate reported earnings that widely missed forecasts and it cut its outlook (http://www.marketwatch.com/story/ge-earnings-miss-for-first-time-in-2-12-years-2017-10-20).
Procter & Gamble Co.(PG) dropped 2.9% after the consumer products company reported quarterly profit (http://www.marketwatch.com/story/procter-gambles-stock-falls-after-results-2017-10-20) that rose above expectations but revenue that came up a bit shy.
Honeywell International Inc.(HON) picked up 0.6% after revenue beat consensus views (http://www.marketwatch.com/story/honeywell-shares-rise-13-after-q3-profit-match-revenue-beat-2017-10-20).
Celgene Corp.(CELG) sank 9.1% after the biotech company abandoned three Crohn's disease drug trials.
PayPal Holdings Inc.(PYPL) jumped 5.3% after the online payment company late Thursday reported an earnings and revenue beat (http://www.marketwatch.com/story/paypal-shares-rise-on-third-quarter-revenue-beat-2017-10-19).
Skechers USA Inc.(SKX) soared 31% after the footwear retailer's earnings out late Thursday beat analyst forecasts (http://www.marketwatch.com/story/skechers-shares-rally-after-earnings-sales-beat-2017-10-19).
Earnings thus far this season have largely come in ahead of expectations, helping support equity prices despite concerns over valuation.
Boeing Co.(BA) rose 0.3% after China Southern Airlines Co. (ZNH) agreed to by 38 aircraft from the U.S. plane maker. Singapore Airlines Ltd. (C6L.SG) is also expected to complete an order of 39 Boeing planes next week.
Shares of Atlassian Inc.(TEAM) jumped 21%. The Australian cloud-software company's results and outlook beat forecasts after the close.
Read:Atlassian heads toward $10 billion market cap with a story to tell (http://www.marketwatch.com/story/atlassian-heads-toward-10-billion-market-cap-with-a-story-to-tell-2017-10-19)
(http://www.marketwatch.com/story/atlassian-heads-toward-10-billion-market-cap-with-a-story-to-tell-2017-10-19)How are other assets trading?
In Asia markets closed mostly higher (http://www.marketwatch.com/story/asia-pacific-stocks-start-lower-edge-back-into-positive-territory-2017-10-19), with the Hong Kong Hang Seng ending 1.2% higher. European stocks rose slightly (http://www.marketwatch.com/story/european-stocks-nudge-higher-as-volvo-rallies-2017-10-20), helped by a jump for Volvo AB (VOLV-B.SK).
Oil prices declined, with West Texas Intermediate crude down 0.9% at $50.84 a barrel (http://www.marketwatch.com/story/oil-selloff-continues-as-traders-question-opec-strategy-2017-10-20). Gold futures dropped 0.5% to $1,284 an ounce (http://www.marketwatch.com/story/gold-drops-to-2-week-low-as-dollar-gains-strength-on-tax-reform-hopes-2017-10-20).
The ICE U.S. Dollar Index gained 0.2% to 93.434, with the greenback gaining (http://www.marketwatch.com/story/dollar-storms-higher-on-revived-hopes-for-tax-cuts-2017-10-20) on news of the budget proposal.
(END) Dow Jones Newswires
October 20, 2017 09:54 ET (13:54 GMT)