Stocks Mostly Flat, But Finish Week With Solid Gains

This is the second-longest bull market ever, trailing only the 1990-2000 run during the dot-com era. Today was the eighth straight gain in the S&P 500, its longest winning streak since 2013. The S&P 500 also had its sixth straight record close, the longest such streak since 1997.

The S&P 500 is on track for its ninth consecutive winning year, tying the record from 1991 through 1999. It’s been more than a year since the S&P 500 fell as much as 5 percent from a previous high, the fifth-longest period without such a correction. The Nasdaq is also on an 8-day winning streak. The Russell 2000 was just a fraction off the record high from Tuesday.

The VIX, has closed below 10 for the seventh straight day, already making this the least volatile October in the history of the so-called fear gauge.

Now you might say that this just means the market is overextended and overdue for a pullback. You might say that.

The House narrowly passed a $4.1 trillion budget today. The final tally was 219-206. More than a dozen Republicans voted with Democrats against the budget, objecting to elements of the spending package or to parts of the tax reform proposal. The budget contains $1.1 trillion in non-entitlement spending, including nearly $622 billion on defense. The Senate is voting on a similar measure.

When both chambers pass their respective budget resolutions, it would trigger a legislative process known as reconciliation, during which they could pass a sweeping tax reform bill with a simple majority of 51 votes in the Senate, instead of the usual 60-vote requirement.

That does not mean tax reform will be easy. There are already disagreements over how much to cut certain tax rates, which deductions could be eliminated, and whether the tax reform package would be revenue-neutral. Look for a fight over the elimination of state and local tax deductions.

The number of Americans filing for unemployment benefits dropped 12,000 to a seasonally adjusted 260,000 for the week ended Sept. 30. The Labor Department’s closely watched employment report on Friday will likely show that nonfarm payrolls increased by 90,000 jobs last month after rising by 156,000 in August. The estimates are all over the place because no one is sure exactly what impact the hurricanes had on jobs.

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The Commerce Department said the trade gap declined 2.7 percent to $42.4 billion, the smallest since September 2016. When adjusted for inflation, the trade deficit was little changed at $61.8 billion.

The so-called real trade deficit average for July and August was below the second-quarter average of $62.4 billion. That suggests trade could contribute to gross domestic product in the third quarter and help to soften the economic blow of the hurricanes, which are expected to cut at least six-tenths of a percentage point from economic growth in the third quarter.

In another report, the Commerce Department said orders for non-defense capital goods excluding aircraft – seen as a measure of business spending plans – jumped 1.1 percent in August instead of the 0.9 percent increase reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, shot up 1.1 percent instead of the previously reported 0.7 percent rise. Strong business spending on equipment is helping to underpin manufacturing. Business investment in equipment grew at its fastest pace in nearly two years in the second quarter.

Stranger Things will cost more. Netflix (NASDAQ:NFLX) will now charge $11 per month instead of $10 for a plan that includes HD and allows people to simultaneously watch programs on two different internet-connected devices. The price for another plan that includes ultra-high definition, or 4K, video, is going up by 17 percent, to $14 from $12 a month. A plan that limits subscribers to one screen at a time without high-definition will remain at $8 a month.

The increase will be the first in two years for Netflix, although it won’t seem that way for millions of subscribers. That’s because Netflix temporarily froze its rates for long-time subscribers the last two times it raised its prices, delaying the most recent increases until the second half of last year for them. Netflix isn’t giving anyone a break this time around.

A new program called Seller Flex would allow more items on Amazon (NASDAQ:AMZN) — even those sold by third parties — to be listed with the Prime badge of two-day shipping. Amazon itself will handle the pickup of packages from sellers. In some cases, it will also handle delivery to customers, eliminating the major delivery partners of United Parcel Service Inc (NYSE:UPS) and FedEx (NYSE:FDX).

Shares of Amazon . FedEx ultimately closed a fraction of a point higher, while UPS recovered to close 0.7 percent down. UPS says that no customer constitutes 10 percent of its revenue, and FedEx says no one constitutes three percent of its revenue. So, while there is exposure to Amazon, it is not make or break.

Amazon is prudently cherry-picking areas with dense delivery and will probably still leave rural delivery up to other companies. Meanwhile, Amazon could also take years to establish its new service, but it is coming. Amazon has not taken over the world, not yet.

Two-thirds of Amazon’s revenue comes from sales in the U.S. Amazon Prime is available in a dozen or so countries, but it’s not big in many of them. The biggest global prize is India, where Amazon has pledged to spend $5 billion to break into what many technology companies see as a future gold mine.

Written By: Marvin Clark