US open: Wall Street climbs 'wall of worry' on tax cut progress

Wall Street continued to climb the proverbial 'wall of worry' following Senate approval of the White House's budget resolution for fiscal year 2018, which some believed paved the way for tax cuts.

Overnight, Senate republicans approved the resolution with 51 votes in favour and 49 against, possibly handing the Trump administration its first significant legislative victory and paving the way to increase the government deficit by $1.5trn over the next decade in part to finance the tax reductions.

However, the measure approved by the Senate needed to be reconciled with a different proposal from the House of Representatives, a process which some observers blieved might take as long as two weeks.

Against that backdrop, as of 1458 BST the Dow Jones Industrial Average was ahead by 0.29% or 66.23 points at 23,229.27, alongside a gain of 0.34% or 8,.76 points on the S&P 500 and a 0.50% advance to 6,638.32 for the Nasdaq Composite.

From a sector standpoint, the best performing industry groups were: Footwear (2.69%), Electronic office equipment (2.47%) and Clothing&Accesories (2.40%).

In parallel, the US dollar spot index was climbing 0.43% to 93.67, alongside a six basis point rise on the 10-year US government bond yield to 2.38%.

To take note of, as a group shares of banks were also sportng hefty gains, with the KBW sector index trading up by 1.25% to 100.83.

Investors were also likely to be eyeing reports that Trump favours Federal Reserve Governor Jerome Powell as the next Fed chairman. According to Politico, Powell is the leading candidate to become the chair of the US central bank after Trump concluded a series of meetings with five finalists on Thursday.

CMC Markets's Michael Hewson said: "US markets opened at new record highs today, after another record close for the Dow last night, as speculation around the new head of the Federal Reserve continues to gain traction, while the prospect of tax cuts and/or tax reform helped put another floor under US stocks after some initial weakness in early trade yesterday."

Market participants will also eye speeches by Fed President Loretta Mester and Fed chair Janet Yellen later in the day.

On the economic front, the National Association of Realtors reported a 0.7% rise in existing home sales for the month of September to reach an annualised pace of 5.39m (consensus: 5.30m).

Nevertheless, NAR chief economist Lawrence Yun described the gain as "meagre", complaining of a lack of listing and "fast-rising" prices which were crimping budgets.

Versus a year ago existing home sales fell by 1.5%.

In corporate news, stock in General Electric dropped after the company’s third-quarter earnings missed expectations, with profit taking a hit from restructuring costs.

Procter&Gamble's shares tumbled after the consumer goods giant posted lower than expected fiscal first quarter revenues of $16.65bn.

Elsewhere, PayPal Holdings was in the black after quarterly earnings and revenue on Thursday surpassed expectations, while Skechers surged after an earnings beat late on Thursday.