A third tumultuous day with first a 50 point drop out the gate followed by a hundred point rise to close 40 up.  For the second day, the driver has been hopes for tax reform which gave a boost to financials as among the expected beneficiaries.  Healthcare also got a boost plus the news that Q2 growth had been better than previously reported.  S&P P/E is still 20 percent higher than historical long-term averages.  The bears say a major correction is coming, the bulls say things will keep going as long as there’s no other reason than historical averages for them not to.  Volume was below average at 5.8 billion.

thu  SEPTEMBER 28, 2017 / 4:38 pM

S&P ekes out record on healthcare gains, tax plan hopes

Chuck Mikolajczak

DJ: 22,381.20  +40.49    NAS: 6,453.45  +0.19      S&P: 2,510.06  +3.02          9/28

(Reuters) - Wall Street edged higher on Thursday, as the S&P 500 eked out a record on gains in McDonald’s and healthcare names, while investors continued to hope President Donald Trump will be able to make progress on tax reform.  Shares in the world’s biggest fast food chain (MCD.N) rose 2.23 percent, their biggest single-day percentage gain in more than two months, after Longbow Research upgraded the stock to “buy.”

Financials .SPSY, up 0.12 percent, and the Russell 2000 index of smallcap stocks , up 0.27 percent, which are expected to be among the beneficiaries of a tax reduction, turned higher after trading lower in the early portion of the session.

But gains were tempered with equities at record highs and valuations elevated. The forward price-to-earnings ratio (P/E) on the S&P stood at 17.9 compared with its long-term average of 15.1 while the forward P/E on the Russell is 26.3 against an average of 21.3.

“It looks like the market doesn’t want to sell strength here, it wants to buy weakness,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

U.S. Treasury Secretary Steven Mnuchin said Trump’s proposal for a cut in the corporate income tax rate to 20 percent was “not negotiable.”

The plan, which called for tax cuts for most Americans, also drew criticism for favoring business and the rich and potentially adding trillions of dollars to the deficit.

A Commerce Department report showed the economy grew a bit faster than previously estimated in the second quarter, but the momentum probably slowed in the third as Hurricanes Harvey and Irma temporarily curbed activity. The storms also pushed up initial claims for state unemployment benefits for the week, the Labor Department said.

“People are waiting to see if the economy actually picks up, they are going to be waiting a long time if they are anticipating it is going to pick up meaningfully,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.

The Dow Jones Industrial Average .DJI rose 40.49 points, or 0.18 percent, to 22,381.2, the S&P 500 .SPX gained 3.02 points, or 0.12 percent, to 2,510.06 and the Nasdaq Composite .IXIC added 0.19 points, to 6,453.45.  The healthcare index .SPXHC led S&P gainers, rising by a third of a percent. 

AbbVie (ABBV.N) was the biggest boost to the S&P, rising 4.97 percent after announcing a global resolution of intellectual property-related litigation with Amgen (AMGN.O).  Abbott (ABT.N) advanced 2.86 percent after the U.S. FDA approved the company’s glucose monitoring device. The company also won U.S. antitrust approval to buy Alere Inc (ALR.N) on condition that it sell two point-of-care medical testing businesses. 

Advancing issues outnumbered declining ones on the NYSE by a 1.47-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.

About 5.85 billion shares changed hands in U.S. exchanges, compared with the 6.26 billion daily average over the last 20 sessions.