Earnings season kicked into full gear this week, with most results surpassing expectations. Of the companies that have reported quarterly results as of Friday morning, 79 percent have exceeded earnings expectations while 89 percent have surpassed sales estimates, according to Nick Raich, CEO of The Earnings Scout.
Morgan Stanley and American Express are among the companies that reported better-than-expected results this week.
"This reporting season should confirm continuity of synchronized global growth and start to provide clarity on the impact of tax reform on earnings and prospects for rising shareholder distributions," Dubravko Lakos-Bujas, head of U.S. equity strategy at J.P. Morgan, said in a note Friday.
Investors have poured cash into stock funds at the highest pace ever over the past four weeks as they try to get a piece of the surging stock market. Year to date, stocks are up about 5 percent.
IBM and American Express dropped 4.1 percent and 2.4 percent, respectively, putting a lid on the Dow. IBM warned Thursday it could take a hit from a higher tax rate for 2018, while American Express posted its first overall earnings loss in 25 years.
Elsewhere, the 10-year yield hit its highest level since 2014, reaching 2.642 percent. "If we continue higher on yields, at some point it's going to impact equities," said JJ Kinahan, chief market strategist at TD Ameritrade. "But right now, the market can take higher rates" since the economy and earnings are strong.