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Stocks close mixed as earnings season winds down

CNBC logo CNBC 11/7/2017 Fred Imbert

Stocks ended narrowly mixed Tuesday as the corporate earnings season started to wind down.

The Dow added 8 points, the S&P 500 was little changed, and the Nasdaq slipped 0.27 percent.

Nearly 85 percent of the S&P 500 had reported earnings as of Tuesday morning, with 74 percent of those companies surpassing earnings expectations, according to FactSet.

The major indexes hit record closing highs on Monday, on the back of a surge of dealmaking news.

"There's a bit of digesting going on but there's not much indigestion," said Bruce McCain, a chief investment strategist at Key Private Bank. "This market has been impervious to almost everything that's been thrown its way."

The major averages have had a banner year, rising more than 15 percent to all-time highs. But the market's rally can be traced back to just after the U.S. presidential election last year. Since Nov. 8, 2016, the indexes are up at least 20 percent.

"The question now most likely on investors' minds is: 'How long will this ride last?'" said Sam Stovall, chief investment strategist at CFRA Research in a note Monday. "History suggests longer than we would expect. On average, the S&P 500 continued sailing along for another year after the conclusion of a president's first year since being elected before slipping into a new decline of 10% or more."

Strong corporate earnings, along with improving economic data and the prospects of changes to the U.S. tax code, have helped stocks climb higher since President Donald Trump was elected.

In the first and second quarter of the year, S&P 500 earnings grew 15.5 percent and 10.8 percent, respectively. The current earnings season has been a strong one, too. According to FactSet, third-quarter earnings have grown 6.3 percent on a year-over-year basis.

On the tax-reform front, the House released last week a bill aimed at overhauling the U.S. tax code. Among the biggest changes would be permanently lowering the corporate tax rate to 20 percent from 35 percent.


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