The US markets closed higher on Friday and booked weekly gains, as investor expectations grew for passage of Republican-backed tax-cut legislation. Politics surrounding the tax bill continued to influence markets. A last-minute expansion of the child tax credit persuaded Sen. Marco Rubio, a Florida Republican, to back the measure. Rubio on Thursday threatened to vote against the tax bill unless it included an expansion of the child tax credit.
On the economy front, industrial production in the US rose 0.2% in November to mark the third straight advance. Although the increase was only half as big as the forecast called for, a large gain in October was even stronger than initially reported, likely easing any worries. Higher production in November was spurred by oil-and-gas companies getting fully back online after a series of hurricanes. Total US output would have been flat if energy were excluded. The 2% increase in energy production was offset by a 1.9% drop in utility output. Auto production also fell 0.9% after a big increase in the prior month. Still, the report contained plenty of bright spots. Capacity utilization, for instance, rose to a 2½ year high of 77.1%. And over the past year production has climbed 3.4%, the biggest increase since the end of 2014.
On the other hand, the Empire State manufacturing index fell slightly in December, to a reading of 18 from 19.6 in November. Any reading above zero indicates improving conditions, though it’s the second drop in a row. The new-orders index eased 1.2 points to 19.5, and the shipments index rose 4 points to a reading of 22.4. On the employment side, the number of employees fell 6.4 points to a reading of 5.1 and the average workweek edged up a reading of zero. Manufacturing has had a nice run of late, buoyed by strong overseas growth, a weaker dollar and the recovery in commodity prices, as well as the solid domestic economy. But optimism has tempered from October’s dizzying levels.
The Dow Jones Industrial Average added 143.08 points or 0.58 percent to 24,651.74, the Nasdaq gained 80.057 points or 1.17 percent to 6,936.58, and the S&P 500 edged higher by 23.8 points or 0.90 percent to 2,675.81.
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