Stocks at record highs as Congress inches closer to tax cuts

Stocks continued their ascent Friday, capping the week at new all-time highs, as lawmakers took a critical step toward cutting taxes.

The Dow Jones Industrial Average advanced 165 points, or 0.71%, to 23,328.63. The S&P 500 rose 13 points, or 0.51%, to 2,575.21. The Nasdaq gained 24 points, or 0.36%, to 6,629.05.

All three major indices posted fresh records, and the Dow had its best week in more than a month. The blue-chip index has booked 52 record closes since the start of the year, extending its third-longest bull market in history. For the week, the Dow rose about 2%. The S&P gained 0.86%, while the Nasdaq was up 0.07%.

The bull market has enjoyed a long run, fueled by corporate earnings growth and upbeat views on the U.S. economy. Stocks got an extra boost Friday after the Senate approved a budget resolution for fiscal 2018, paving the way for Congress to pass a large tax-cut package backed by President Donald Trump. Investors are keeping a close eye on developments in D.C. in anticipation of tax cuts for large and small businesses, as well as individual earners.

However, stocks don’t necessarily reflect the belief that tax reform is coming, according to Jamie Cox, managing partner at Harris Financial Group. He noted that corporations are already reporting strong earnings, so a lower tax rate isn’t essential to move markets forward.

“I don’t think tax reform is in the market, because it hasn’t happened yet,” Cox said in a recent interview, adding that tax cuts will spur economic growth. “A lot of times, tax cuts come when the economy needs a jolt. That’s not the case here.”

Financial and industrials stocks propelled the market’s rally Friday, while technology names such as Microsoft (NASDAQ:MSFT) and Paypal (NASDAQ:PYPL) also performed well.

Paypal jumped 5.5% after beating Wall Street’s estimates for third-quarter earnings and revenue.

General Electric rose 1%, reversing earlier losses. The conglomerate cuts its 2017 financial projections.

In economic news, existing home sales posted a surprise increase in September. The National Association of Realtors said home resales improved 0.7% to a seasonally adjusted annual rate of 5.39 million units. Supply fell 6.4% compared to last year. Housing inventory in the U.S. has dropped in recent years, and a shortage of available homes has supported higher pricing.

The yield on the 10-year Treasury bond rose to 2.385% from 2.323%.

U.S. oil futures climbed 18 cents to settle at $51.47 per barrel. Brent crude, the international benchmark, was trading 61 cents higher at $57.84 per barrel.