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Nasdaq hits record as stocks close mixed ahead of earnings

CNBC logo CNBC 1/9/2017 Fred Imbert

Stocks closed mixed Monday, with and utilities lagging as investors geared up for the start of earnings season and assessed falling oil prices. 

The Nasdaq advanced about 0.2 percent to a new all-time high as the iShares Nasdaq biotechnology ETF (IBB) and Apple advanced around 1 percent. Leading IBB higher was Ariad Pharmaceuticals, which spiked more than 70 percent after announcing it's being taken over by Takeda, a leading Japanese pharmaceutical company.

The Dow fell 76 points, with ExxonMobil and Chevron contributing the most losses.

The S&P 500 slipped 0.35 percent, with energy and utilities falling more than 1 percent. U.S. oil prices dropped around 3 percent to $52.30 per barrel, amid U.S. production worries.

The three major indexes posted new all-time intraday highs on Friday, as the Dow came within a third of a point of hitting the psychological mark of 20,000.

"Valuations here are rich by almost any measure," said Bruce Bittles, chief investment strategist at Baird. "If we slip into not-so-strong earnings growth, then stocks could be vulnerable."

Financial giants Bank of America, BlackRock and JPMorgan Chase are among the companies slated to report this week. The financial sector has posted a sharp rally since Donald Trump's U.S. election victory, rising 17.9 percent since Nov. 8, as of Friday's close. The broader indexes have also gained sharply since the election.

"Markets have been focused on his economic policies, ... but there has always been uncertainty," said Quincy Krosby, market strategist at Prudential Financial. "Market participants are trying to figure out which Trump they are going to get."

"The concern that we would express is that there's a lot of excitement about these policies, but they haven't been enacted yet," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank.

S&P 500 earnings per share are expected to record a 4.4 percent year-over-year increase, Lindsey Bell, investment strategist at CFRA, said in a Friday note.

"The key thing for me was how quiet the the pre-announcement season was," said Art Hogan, chief market strategist at Wunderlich Securities. "A quiet pre-announcement season portends for a positive earnings season." There are no major economic data due Monday. However, Atlanta Federal Reserve President Dennis Lockhart said in a speech the central bank should step aside, as the economic crisis is "largely done." Lockhart is due to retire from his post in February.

Separately, Boston Fed President Eric Rosengren said the U.S. central bank should step up its pace of interest-rate increases from the once-a-year pattern it has pursued since 2015, warning of inflation risks if it does not. "I expect that appropriate monetary policy will need to normalize more quickly than over the past year," Rosengren said in prepared remarks.

Overseas, European equities fell broadly, with the pan-European Stoxx 600 index sliding 0.5 percent as the banking sector shed around 2 percent. U.K. stocks bucked the trend, however, as the FTSE 100 rose 0.38 percent on the back of a falling pound.

Sterling dropped more than 1 percent against the dollar to $1.216, amid talk of Britain drastically reworking trade ties with the European Union after Brexit. The dollar index, which measures the greenback's performance against six other currencies, traded 0.25 percent lower.

U.S. Treasurys rose on Monday, with the two-year note yield slipping to 1.19 percent and the benchmark 10-year note yield falling to 2.376 percent.

About four stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 301 million and a composite volume of 1.41 billion in midday trade.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.6.

Reuters contributed to this report.


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