S&P 500 sets sixth record high close on tax overhaul optimism

By Caroline Valetkevitch

NEW YORK (Reuters) - The S&P 500 posted its sixth straight record high close on Thursday, its longest run since 1997, as investors cheered increased prospects for a tax overhaul with Congress moving closer to agreement on a budget resolution.

In a procedural step forward, the Republican-controlled U.S. House of Representatives approved a fiscal 2018 spending blueprint to help them advance an eventual tax bill.

The blueprint contains a legislative tool that would let Republicans bypass Democrats and pass a tax bill by a simple majority vote in the Senate, where they hold 52 of 100 seats.

"It really started to take off after news that the House passed a portion of the president's plan," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

"I don't know if that's going to make it all the way through ... but you're seeing it in higher Treasury yields, a better financial sector and technology."

The S&P technology index <.SPLRCT>, up 1.1 percent, was the day's top-performing sector, followed by financials, with that index <.SPSY> up 1 percent. The small-cap Russell 2000 <.RUT> rose 0.3 percent. Small-cap companies are seen as among the biggest beneficiaries of any tax cut.

The CBOE Volatility index <.VIX>, which tracks the cost of protection against a decline in the S&P 500, set a record closing low, ending at 9.19.

Also helping stocks, more data pointed to underlying strength in the U.S. economy despite weather-related disruptions, with the trade deficit narrowing in August and jobless claims falling more than expected last week.

New orders for goods made in the United States rose in August and orders for core capital goods were stronger than previously reported.

The Dow Jones Industrial Average rose 113.75 points, or 0.5 percent, to close at 22,775.39, while the S&P 500 gained 14.33 points, or 0.56 percent, to 2,552.07. The Nasdaq Composite added 50.73 points, or 0.78 percent, to 6,585.36.

The S&P 500 has closed higher for the last eight sessions, and posted record closes for the last six, the longest such run since an eight-day streak in June 1997.

Thursday also marked the fourth day in a row where all three major indexes had hit record closing highs.

"Nobody likes to buy at all-time highs, but with the prospect of it going higher, you're missing out, so you have to do some buying to stay competitive," Pavlik said.

Shares of Netflix jumped 5.4 percent after the company raised the monthly subscription fees for two of its three main U.S. plans by $1 and $2, respectively.

Helping banks, Randal Quarles was confirmed as vice chair of the Federal Reserve. The banking sector widely expects Quarles to play a key part in U.S. President Donald Trump's efforts to ease regulations.

The S&P bank index <.SPXBK> was up 1.3 percent.

Bond yields rose, with the benchmark 10-year U.S. Treasury note yield last at 2.349 percent versus 2.332 percent late on Wednesday.

Friday brings the U.S. monthly jobs report, while investors are also anxious to see third-quarter corporate earnings reports.

Analysts expect earnings of S&P 500 companies rose 5.3 percent in the quarter from a year earlier, according to Thomson Reuters data. That would be down from double-digit growth in the first two quarters of this year.

The S&P 500 is likely to finish this year at 2,525, about 13 percent higher than where it was at the end of 2016, based on the median forecast of 47 strategists polled by Reuters.

Advancing issues outnumbered declining ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favoured advancers.

About 5.9 billion shares changed hands on U.S. exchanges. That compares with the 6.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Additional reporting by Gayathree Ganesan and Ankur Banerjee in Bengaluru; Editing by James Dalgleish and Rosalba O'Brien)