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Stocks close near records as earnings offset trade worries

CNBC logo CNBC 8/7/2018 Fred Imbert and Alexandra Gibbs

Stocks ended higher Tuesday as the S&P 500 moved closer to a record high set earlier this year, boosted by strong corporate earnings that offset worries around global trade.

The Dow gained 126 points as Caterpillar climbed. The S&P 500 rose nearly 0.3 percent, with energy and financials outperforming. The Nasdaq also advanced 0.3 percent as Facebook, Netflix and Alphabet all rose. 

Through Monday's close, the S&P 500 was just 0.8 percent from reaching an all-time high of 2,872, set on Jan. 26. The Nasdaq was also within 1 percent of a record high, while the Dow was more than 4 percent from reaching an all-time high. 

The Cboe Volatility Index (VIX) fell to 10.52, its lowest level since Jan. 16, when it hit a low of 10.40. 

Stocks' move overseas comes as a stronger-than-expected earnings season has offset concerns over global trade. Eighty percent of the S&P 500 companies that have reported quarterly results through Friday have posted better-than-expected earnings, on pace to be the highest beat rate since FactSet began tracking the metric in 2008. 

Through Friday, S&P 500 earnings are up 24 percent in the second quarter on a year-over-year basis. Some of the companies that have reported better-than-expected earnings include Apple and Amazon. Dow-component Disney and is scheduled to report earnings after the close. Disney shares rose 1.5 percent. 

"I think in terms of a report card, we can give it an A," said Art Hogan, chief market strategist at B. Riley FBR. "Corporate earnings have been strong, but we've also seen strength in revenue." 

"When you think about what's driving markets right now, it's a tug of war between solid U.S. fundamentals and concerns around trade," Hogan said. "When you think about trade with China, it feels like the situation is escalating. But with Mexico, Canada and the European Union, it seems like it's heading in the right direction." 

Last week, China said it was ready to retaliate with tariffs on around $60 billion worth of U.S. goods, ranging from 5 percent to 25 percent; just days after the U.S. administration revealed that President Donald Trump had spoken with U.S. Trade Representative Robert Lighthizer and asked him to consider increasing the proposed levies on $200 billion worth of Chinese goods up to 25 percent, from 10 percent. 

Chinese state media claimed in editorials over recent days that the Asian nation and its counter-response to America has been "restrained" and "rational," in light of the levies that have been threatened. China's state media also said late Monday that they "will not surrender" to "U.S. trade blackmail."


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