MARKET SNAPSHOT: Dow Logs A Record--along With S&P 500, Nasdaq, Russell 2000--as Budget Bill Passes
By Anora M. Gaudiano, MarketWatch , Ryan Vlastelica
Netflix jumps after raising subscription fees
U.S. stock-market indexes posted solid gains and closed at all-time highs on Thursday after Congress passed a budget resolution--a step seen as setting the stage for an overhaul of the tax code.
What are stock benchmarks doing?
The S&P 500 index rose 14.33 points, or 0.6%, to 2,552.07, rising for an eighth straight session. The benchmark notched its sixth straight record close, marking its longest such streak since the eight consecutive all-time highs in 1997. The index has notched its 43rd record closes in 2017 so far. Among the best performing sectors, financials and technology gained about 1%.
The Nasdaq Composite Index advanced 50.73 points, or 0.8%, to 6,585.36. The Dow Jones Industrial Average rose 113.75 points, or 0.5%, to 22,775.39, notching its 46th record close.
The Russell 2000 index of small stocks gained 4.32 points, or 0.3%, to 1,512.09, a fraction of a point below its record close set earlier this week.
What drove markets?
After a House vote (http://www.marketwatch.com/story/house-passes-budget-resolution-in-key-step-for-tax-plan-2017-10-05), the Senate approved a budget bill on Thursday. Republicans passed tax cuts through what is known as budget reconciliation, which requires just a simple majority in the Senate. Republicans currently control the Senate with 52 seats.
A persistent uptrend for stocks have been partially underpinned by the hope of tax cuts proposed by President Donald Trump, with a likelihood of the passage of a pro-business tax policy often propelling buying in assets perceived as risky.
What are strategists saying?
-- "Up until a week ago there has been a lot of pessimism among investors that the Trump administration cannot pass any tax reforms, especially after the failure to repeal the [Affordable Healthcare Act]. But that seems to have changed last week, when the [Big Six] outlined their tax plan and more people now believe companies' earnings will be boosted by lower tax rates," said Phil Orlando, chief equity market strategist at Federated investors. The so-called Big Six includes the leaders of the House and Senate, national economic director Gary Cohn and Treasury Secretary Steven Mnuchin.
-- "The path of least resistance for markets seems to be higher. Revisions on the earnings front have been positive, the global growth theme is continuing, and I think valuations are fine, given where we are in terms of inflation," said Aaron Clark, portfolio manager at GW&K Investment Management. "There are no classic signs of exuberance that would derail the market's trajectory, and I wouldn't be surprised to see multiples and earnings go higher, absent some crazy macro shock that no one can forecast."
See:Some investors see signs stock market 'on verge' of a melt-up (http://www.marketwatch.com/story/why-stocks-may-be-on-verge-of-a-melt-up-2017-10-04)
Which stocks are in focus?
Netflix Inc.(NFLX) shares jumped 5.4% after the video-streaming giant raised the price of two of its memberships (http://www.marketwatch.com/story/netflix-is-raising-the-cost-of-subscriptions-again-2017-10-05). The stock is up about 83% over the past 12 months.
United Parcel Service Inc. (UPS) fell 0.7% after Bloomberg reported that Amazon.com Inc.(AMZN) was testing a new delivery service (http://www.marketwatch.com/story/ups-fedex-stocks-fall-after-report-of-amazon-testing-new-delivery-service-2017-10-05)that could pose a competitive threat to the package-shipping companies. Amazon was up 1.6%.
SeaWorld Entertainment Inc.(SEAS) fell 6.5% after news Legoland parent Merlin Entertainments Inc.(MERL.LN) might buy part of the troubled water park operator (http://www.marketwatch.com/story/seaworld-surges-on-reports-of-possible-deal-with-legoland-owner-2017-10-05).
(http://www.marketwatch.com/story/seaworld-surges-on-reports-of-possible-deal-with-legoland-owner-2017-10-05)Corona-parent Constellation Brands Inc. (STZ) gained 4% after it reported second-quarter earnings that beat expectations and raised its outlook (http://www.marketwatch.com/story/constellation-brands-stock-jumps-after-profit-beat-raised-outlook-2017-10-05).
What are Fed speakers and data saying?
On Thursday, Fed Gov. Jerome Powell said more rules and regulations aren't always the best solution to problems in financial markets. Powell is among leading candidates to replace Janet Yellen (http://www.marketwatch.com/story/jerome-powell-in-the-running-for-top-fed-spot-echoes-one-of-trumps-favorite-economic-themes-2017-10-03) as Fed chief when her term at the helm expires in February.
Also read: Pocket guide to Trump's candidates for top Fed spot (http://www.marketwatch.com/story/pocket-guide-to-trumps-candidates-for-top-fed-spot-2017-10-05)
Philadelphia Fed President Patrick Harker (http://www.marketwatch.com/story/feds-harker-says-he-has-penciled-in-december-rate-hike-2017-10-05), in an interview with CNBC, said he "penciled in a third rate hike in December."
On the data front, in the latest economic report, initial jobless claims fell by 12,000 (http://www.marketwatch.com/story/jobless-claims-drop-12000-to-260000-as-disruptions-from-hurricanes-ease-2017-10-05) (http://www.marketwatch.com/story/jobless-claims-drop-12000-to-260000-as-disruptions-from-hurricanes-ease-2017-10-05) in the latest week. Separately, the U.S. trade deficit declined (http://www.marketwatch.com/story/us-trade-deficit-falls-to-11-month-low-2017-10-05) to its lowest level in 11 months.
What are other assets doing?
European stocks ended mixed (http://www.marketwatch.com/story/european-stocks-trade-mixed-as-investors-absorb-catalonia-developments-2017-10-05), while Spanish stocks rebounded after posting the biggest loss in 15 months on Wednesday. Spanish assets have been battered in recent days in the fallout from an independence vote from the Catalan region that turned violent.
Read:Catalonia's secession from Spain may come as soon as Monday (http://www.marketwatch.com/story/catalonias-secession-from-spain-may-come-as-soon-as-monday-2017-10-04)
Asian markets traded mostly positive (http://www.marketwatch.com/story/nikkei-swings-to-slight-gains-as-other-asian-markets-rise-2017-10-04), though several markets were shut for holidays.
Oil futures (http://www.marketwatch.com/story/oil-prices-stabilize-after-us-production-hits-july-2015-highs-2017-10-05) settled higher, the ICE U.S. Dollar Index (http://www.marketwatch.com/story/dollar-higher-against-european-currencies-including-significant-move-against-pound-2017-10-05) added to its two-month high, and gold futures (http://www.marketwatch.com/story/gold-tips-higher-aims-for-second-consecutive-gain-2017-10-05) finished lower, adding to its weekly loss.
Barbara Kollmeyer contributed to this report.
(END) Dow Jones Newswires
October 05, 2017 16:25 ET (20:25 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.