Dow, S&P 500 set to resume record run as Senate clears hurdle to tax reform
GE stocks slump after earnings miss
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U.S. stock futures were indicating a stronger session on Wall Street on Friday, after the Senate narrowly passed a budget blueprint for the next fiscal year. The move 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?
Dow Jones Industrial Average futures YMZ7, +0.36% were up 87 points, or 0.4%, to 23,201, while S&P 500 futuresESZ7, +0.22% gained 6 points, or 0.3%, to 2,566.75. Nasdaq- NQZ7, +0.25% futures gained 16 points, or 0.2%, to 6,113.25.
On Thursday, the S&P 500 and Dow industrials overcame a bumpy session to rebound toward the close, managing to log fresh records. The Dow DJIA, +0.02% went from a roughly 105-point loss, at its lowest point during the session, to finish up 5.49 points at 23,163.04, for its 52nd all-time closing high of the year. The S&P 500 SPX, +0.03% closed up 0.84 point at 2,562.10, for its 48th record close of 2017.
Unable to shake off weakness, the Nasdaq Composite IndexCOMP, -0.29% fell 0.3% to 6,605.07.
For the week, the three benchmarks were all set for weekly gains if they can hold the positive tone through Friday’s session. As of Thursday’s close, the S&P was up 0.4% for the week and the Dow average was 1.3% higher, while the Nasdaq was marginally lower.
What’s driving markets?
Late Thursday, the Senate passed a budget blueprint for the next fiscal year, 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.”
Meanwhile, there was a development in another key issue for investors—who will be the next person to chair the Federal Reserve. Politico reported Thursday that Trump is leaning toward Fed. Gov. Jerome Powell. The president met with current Chairwoman Janet Yellen on Thursday.
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.
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, +1.99% slumped 4.8% premarket after the industrial conglomerate reported earnings that widely missed forecasts.
Procter & Gamble Co. PG, -0.53% dropped 1.2% after the consumer products company reported quarterly profit that rose above expectations but revenue that came up a bit shy.
Honeywell International Inc. HON, +0.13% picked up 0.8% after revenue beat views.
Celgene Corp. CELG, -0.88% slid 5.1% ahead of the bell after the biotech company abandoned three Crohn’s disease drug trials.
PayPal Holdings Inc. PYPL, -0.01% jumped 3.5% ahead of Friday’s opening bell after the online payment company late Thursday reported an earnings and revenue beat.
Skechers USA Inc. SKX, -4.22% soared 24% in premarket action after the footwear retailer’s earnings out late Thursday beat analyst forecasts.
Boeing Co. BA, -0.38% rose 0.4% after China Southern Airlines Co. 1055, +1.49% agreed to by 38 aircraft from the U.S. plane maker. Singapore Airlines Ltd. C6L, +0.39% is also expected to complete an order of 39 Boeing planes next week.
Shares of Atlassian Inc. TEAM, +1.11% jumped 12%. The Australian cloud-software company’s results and outlook beat forecasts after the close.
In Asia ADOW, +0.08% markets closed mostly higher, with the Hong Kong Hang Seng HSI, +1.17% ending 1.2% higher. European stocks SXXP, +0.30% rose slightly, helped by a jump for Volvo AB VOLVB, +6.77%
Oil prices declined, with West Texas Intermediate crudeCLX7, -0.58% down 0.9% at $50.84 a barrel. Gold futuresGCZ7, -0.34% dropped 0.5% to $1,284 an ounce.
The ICE U.S. Dollar Index DXY, +0.25% gained 0.2% to 93.434, with the greenback gaining on news of the budget proposal.
