US stocks end at records on tax cut progress, Dow up 0.7 per cent

VIDEO: REUTERS

NEW YORK (AFP) - Wall Street stocks surged to fresh record highs on Friday (Oct 20) on increased confidence that Washington will enact tax cuts after a Senate vote eased the proposal's road on Capitol Hill.

All three major indices were at records at the closing bell, with the Dow Jones Industrial Average rising 0.7 per cent to 23,328.63.

The broad-based S&P 500 gained 0.5 per cent to 2,575.21, while the tech-rich Nasdaq Composite Index advanced 0.4 per cent 6,629.05.

Investors were cheered by a party-line 51-49 vote in the Senate for a federal budget plan that permits the legislative body to pass the tax cut plan with a simple majority vote instead of a 60-person supermajority.

The Senate's resolution, which differs from the House version, is a "necessary step" in the long process for the measure to become law, said economist Mickey Levy of Berenberg Capital Markets.

"We continue to expect enactment of tax legislation in Spring 2018, but the chance of quicker passage will increase if the House adopts the Senate's budget resolution," Levy said.

 

Banking shares were especially strong with Dow members JPMorgan Chase and Goldman Sachs gaining 1.4 per cent and 2 per cent.

General Electric finished up 1.1 per cent after investors warmed to a pledge by new chief executive John Flannery to do what it takes to turn around the slumping industrial giant.

GE's net income for the third-quarter fell 9.7 per cent to US$1.8 billion (S$2.4 billion). Shares initially tumbled on the results, which included a steep cut to its 2017 profit forecast.

Procter & Gamble sank 3.7 per cent after reporting a 5.1 per cent rise in quarterly profit to US$2.9 billion. The consumer products giant delivered another disappointing quarter in its grooming division and investors were rattled by downcast commentary on the overall market for consumer goods.