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Stocks close lower to end longest win streak in 4 years

CNBC logo CNBC 11/10/2017 Fred Imbert

Stocks closed mostly lower Friday as some of the largest tech stocks pulled back.

The Dow lost 39 points, with Intel and Merck the biggest decliners. But a 3 percent gain in Disney capped losses in the 30-stock index.

The S&P 500 declined 0.09 percent, with health care and energy the biggest declining sectors. Johnson Controls was the worst-performing stock in the index, falling 4 percent.

The Nasdaq finished just above the flatline.

The Dow and S&P 500 snapped an eight-week winning streak, their longest since 2013. The Russell 2000, which tracks small-cap stocks, posted its biggest weekly decline since August.

"Short-term overbought conditions are still in place, so we think it will take a couple of weeks for the pullback to run its course," said Katie Stockton, a chief technical strategist at BTIG. "The loss of momentum is likely to be most pronounced in stocks that have extended their uptrends over the past several weeks."

For the week, tech stocks are down 0.4 percent. Tech has been the best-performing sector this year. Stocks have also been pressured by fears that a corporate tax cut could be delayed.

On Thursday, the three major indexes fell more than 1 percent before closing well off their session lows as details of a Senate tax plan emerged. The plan would push back a corporate tax cut until 2019.

Worries about a pullback in high-yield bonds also pressured stocks this week. The iShares iBoxx High Yield Corporate Bond ETF is down 1.1 percent. High-yield bonds have served as a leading indicator for risk appetite in the past.

Chipmaker stocks bucked the trend, however. Nvidia posted earnings per share and revenue that easily beat analyst expectations. The company's stock rose 4 percent and was the best performer in the S&P 500.

"We've been bearish for most of this year, anticipating that a slowdown in gaming would drive sharp revenue deceleration in 2017," said Nomura Instinet analyst Romit Shah. "However, Nvidia demonstrated good diversity in gaming with Nintendo Switch and crypto-currency, offsetting weakness in core gaming earlier in the year."

Other chipmakers, including Micron and Advanced Micro Devices, also rose. The semiconductor space has been on fire this year. The iShares PHLX Semiconductor exchange-traded fund (SOXX) is up more than 40 percent in 2017. 

The retail sector also saw positive earnings surprises, with J.C. Penney shares surging 16 percent on stronger-than-expected quarterly results. Nordstrom's results also beat expectations, but the stock fell slightly on a bigger-than-expected decline in same-store sales, a key metric for retailers.


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