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Stocks close higher ahead of major earnings week

U.S. stocks climbed on Friday, but closed lower for the week, as investors weighed quarterly results from Wells Fargo and readied for a slew earnings ahead.

Expectations for the second-quarter earnings season have "picked up more than I might have thought in recent weeks, and that certainly increases the risk," said Bruce McCain, chief investment strategist at key Private Bank.

For the first quarter, investors "dismissed any bad news because of the severe weather. The flip side is now there are expectations for the economy and earnings to deliver, so we'll have to see. With valuations as high as they are, a lot of it hinges on whether the economy and earnings can live up to expectations," said McCain.

Lorillard rose and Reynolds American fell after the tobacco companies confirmed merger talks; Fastenal dropped after the industrial supplier reported revenue short of estimates and Gap also declined after the retailer's same-store sales fell in June.

Shares of Wells Fargo slipped after the nation's largest mortgage lender reported revenue just above estimates.

Read MoreWells Fargo reports slight profit rise, says economy is improving

"Sometimes the market takes a wait-and-see attitude ahead of earnings, and we have an avalanche kicking in next week," Art Hogan, chief market strategist at Wunderlich Securities, said of Friday's muted trading action.

In the technology sector, Yahoo and Intel report quarterly results on Tuesday, following by eBay on Wednesday.

Read MoreWhat investors are looking for in tech earnings next week

Banks including Citigroup, JPMorgan Chase and Goldman Sachs Group are also among those slated to report in coming sessions.

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Falling 0.7 percent from last Friday's finish, the Dow Jones Industrial Average added 28.74 points, or 0.2 percent, to 16,943.81, with Verizon Communications and General Electric leading blue-chip gains and Chevron and Exxon Mobil weighing.

Read MoreChevron expects second-quarter profit to rise

Off 0.9 percent for the week, the S&P 500 rose 2.89 points, or 0.2 percent, to 1,967.57, with utilities leading weekly gains among its 10 major industry groups despite losses on Friday.

The Nasdaq rose 19.29 points, or 0.4 percent, to 4,415.49, down 1.6 percent for the week, with both the S&P 500 and the Nasdaq recording their worst weekly hit since April.

The Chicago Board Options Exchange Volatility Index, a measure of investor uncertainty, fell 4.1 percent to 12.08, leaving it 17 percent higher on the week.

For every three shares falling, roughly four rose on the New York Stock Exchange, where nearly 583 million shares traded. Composite volume approached 2.7 billion.

Traders on the floor of the New York Stock Exchange.
Getty Images
Traders on the floor of the New York Stock Exchange.

The yield on the 10-year Treasury note fell 2 basis points to 2.517 percent, and gold futures slipped $1.80, or 0.1 percent, to $1,337.40 an ounce.

The U.S. dollar edged higher against other currencies and crude-oil futures dropped $2.10, or 2 percent, to $100.83 a barrel.

U.S. stocks retained sizable losses on Thursday, but recouped more than half of a steep dive, as investors dialed back concern that came with indications of trouble at one of Portugal's top banks.

Read MoreStocks end lower; recoup most of Portugal-related drop

"Concern over how big this gets and whether there would be contagion started to decrease yesterday," said Hogan.

On Friday, Portugal's government and central bank offered assurances that the southern European nation's financial system was sound, trying to contain concern that came with recent disclosures of financial irregularities at holding companies behind Banco Espirito Santo, Portugal's largest listed bank.

"There are risks overseas that they are still trying to deal with. It would be a mistake to assume this is the only problem bank in Europe," cautioned McCain at Key Private Bank.

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