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Stocks close sharply higher in best start to year since 2003

CNBC logo CNBC 1/12/2018 Fred Imbert
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The Dow jumped to a record high Friday as traders bet on a strong corporate earnings season.

The 30-stock index rose 228 points. The S&P 500 also reached a record high, climbing 0.67 percent, with energy leading. The Nasdaq added 0.68 percent.

The S&P 500 posted its best 10-day start to a year since 2003, up 4 percent. It gained 5.9 percent during the first 10 days of 2003.

J.P. Morgan Chase, BlackRock and Wells Fargo all reported better-than-expected quarterly results.

S&P 500 profits are expected to have risen 11.2 percent in the fourth quarter of last year. All 11 S&P 500 sectors, meanwhile, are expected to post increases in both earnings and revenue, according to FactSet. This would be the first time since 2011 that all the sectors in the S&P 500 posted sales and profit growth for the same quarter.

Stocks have carried over the momentum from 2017 into the new year thus far. The S&P 500 and Nasdaq have closed lower only once this year, while the Dow has fallen just twice. For 2018, the major averages were up at least 3.5 percent entering Friday's session.

"The most important dynamic to focus on in the market is growth," said Sandip Bhagat, chief investment officer at Whittier Trust. He acknowledged that risks to the rally do exist, but added: "They pale in comparison to the economic growth we're seeing."

Recent data suggests the U.S. economy is picking up steam. The Labor Department said its Consumer Price Index excluding the volatile food and energy components rose 0.3 percent last month. That was the biggest advance in the so-called core CPI since January.

Treasury yields ticked higher following the data release. The two-year yield broke above 2 percent for the first time since September 2008. It traded at 2.02 percent at 9:17 a.m. ET.

Facebook, meanwhile, dropped 4 percent after CEO Mark Zuckerberg said the social media company is making a "major change" to its News Feed.

"It is too early to know the full impact of these changes, and we are not adjusting any numbers right now, but it does create risk to Facebook's financials," J.P. Morgan analyst Doug Anmuth said in a note. "It's possible these changes will result in lower ad load in the News Feed."

Reuters contributed to this report.

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