Bank shares buoyant on budget news
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U.S. stocks rose on Friday, with major indexes trading 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 indexes doing?
The Dow Jones Industrial Average rallied 150 points, or 0.7%, to 23,313. The S&P 500 gained 13 points, or 0.5%, to 2,575. The Nasdaq Composite Index rose 34 points, or 0.5%, to 6,639.
All three indexes hit intraday records in early trading, and are on track for weekly gains. The Dow is up 1.7% for the week while the S&P is up 0.9% and the Nasdaq is up 0.5%.
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 500 since a six-week stretch that ended in March.
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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.
Read:What's next for a tax overhaul after the Senate passed its budget (http://www.marketwatch.com/story/whats-next-for-a-tax-overhaul-after-the-senate-passed-its-budget-2017-10-20)
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 1.1%. J.P. Morgan Chase & Co. (JPM) rose 1.8% while Citigroup (C) was up 0.5%.
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.
In the latest economic data, existing home sales rose 0.7% in September (http://www.marketwatch.com/story/existing-home-sales-eke-out-small-gain-in-september-2017-10-20), breaking a three-month losing streak and topping the consensus analyst forecast.
What are strategists saying?
Douglas Coté and Karyn Cavanaugh, strategists at Voya Investment Management, referred to the market as the "Teflon market" given that it appears immune to bad news. Now with the budget taking shape and the country a step closer to the much-anticipated tax cuts, the "nonstick coating" is likely to get even thicker, they said.
"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) recovered from an earlier slump to rise fractionally 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 3.9% 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) rose 1.2% 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 10% after the biotech company abandoned three Crohn's disease drug trials.
PayPal Holdings Inc.(PYPL) jumped 4.7% 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 38% 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).
Boeing Co.(BA) rose 1.6% after China Southern Airlines Co. (ZNH) agreed to buy 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 24%. 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 in the green (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 reversed earlier drop to gain while gold futures dropped to trade around $1,280 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 climbed 0.5% as the greenback rose (http://www.marketwatch.com/story/dollar-storms-higher-on-revived-hopes-for-tax-cuts-2017-10-20) on news of the budget proposal.
--Barbara Kollmeyer and Sara Sjolin contributed to this report.
(END) Dow Jones Newswires
October 20, 2017 14:55 ET (18:55 GMT)