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MARKET SNAPSHOT: Nasdaq Trades At Fresh Record, But Broader Market Slumps Amid Earnings Deluge

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04/27/2017 | 06:51pm CEST

By Sue Chang and Anora Mahmudova, MarketWatch

American Airlines shares drop after carrier increases wages

The Nasdaq on Thursday shook off broad weakness on Wall Street to trade at record levels during a busy day for corporate earnings. Weakness in the energy sector--dragged lower by a sharp slump in crude-oil prices--and a lack of concrete details in President Donald Trump's tax plan revealed on Wednesday also pressured equity markets.

The Nasdaq Composite Index climbed 13 points, or 0.2%, to 6,038 after rising to an intraday high of 6,048.33 earlier. The technology-heavy index has outperformed the other benchmarks this year, rallying 12% versus the S&P 500's 6.5%.

The S&P 500 index was off by 2 points, or 0.1%, to 2,385, with six of the 11 main sectors trading lower. The energy sector was down 1.7%, representing the worst performer among the S&P 500's 11 sectors.

Meanwhile, the Dow Jones Industrial Average slipped 15 points, or 1%, to 20,958.

Recent outperformance in the tech sector has prompted some to question whether the Nasdaq is on the verge of a correction, defined as a decline of at least 10% from a recent peak, particularly given that much of its gains have been fueled by the four heaviest-weighted stocks (http://ritholtz.com/2017/04/is-the-nasdaq-topping-out/?link=mktw)--Apple Inc. (>> Apple Inc.), Facebook Inc. (>> Facebook Inc), Amazon.com Inc. (>> Amazon.com, Inc.), and Microsoft Corp. (>> Microsoft Corporation)as the following chart from Barry Ritholtz, chief investment officer at Ritholtz Wealth Management, shows.

However, the Nasdaq's fresh all-time highs suggests that it isn't set to slump just yet, even as the rest of Wall Street stocks struggle to achieve new heights.

Tentative trading action comes after a choppy session on Wednesday, when markets closed marginally lower as traders weighed the tax proposal from Trump's administration.

Still, the major U.S. equity benchmarks are still trading near records, even if the moves have been in fits and starts.

Analysts said the Trump's tax proposal was light on specifics and failed to address the question of how its tax cuts would be funded. One key proposal is to lower the corporate tax rate to 15% from 35%, with the aim of making U.S. companies more competitive internationally.

"Investors are anxious for details of the tax plan. They are also concerned about the shift from monetary to fiscal accommodation," said Eric Wiegand, senior portfolio manager at the Private Client Reserve, U.S. Bank.

John Higgins, chief markets economist at Capital Economics, said there was nothing in Trump's proposals to support stocks and predicted that the final version will be even more "watered down" than from the announcement.

Opinion:Trump's tax plan sets the stage for Dow 30,000

Earnings deluge: In Thursday's trade, investors were back to focusing on corporate earnings with a long list of companies reporting.

"Year-over-year improvement in earnings growth is tremendous, driving markets higher," Wiegand said.

Shares of Southwest Airlines Co.(>> Southwest Airlines Co) slid more than 3% after the carrier reported earnings below expectations .

Ford Motor Co.(F) fell 1.6% even after the car giant's earnings and revenue topped Wall Street forecasts.

Bristol-Myers Squibb Co.(>> Bristol-Myers Squibb Co) also beat forecasts, sending the shares 3.4% higher .

Dow Chemical Co.(>> Dow Chemical Co) shares shed 1.6% even after earnings came in ahead of expectations .

Shares of Under Armour Inc.(>> Under Armour Inc) soared 9.4% after the athletic apparel reported a loss for the first quarter, but it was smaller than expected .

American Airlines Group Inc.(>> American Airlines Group Inc) shares slumped 7% after the air carrier reported first-quarter results, and announced a pay increase for crew members.

Domino's Pizza Inc.(>> Domino's Pizza, Inc.) shares rose 3.3% after the pizza maker beat estimates.

Shares of PayPal Holdings Inc.(>> Paypal Holdings Inc) rallied 6.9% after the online-payments company late Wednesday beat earnings expectations and announced a $5 billion stock-repurchase plan.

H&R Block Inc.(>> H & R Block Inc) and Intuit Inc.(>> Intuit Inc.) extended gains, after rallying in the extended session Wednesday after earnings reports.

After the market closes, earnings from Google parent Alphabet Inc.(>> Alphabet Inc) (>> Alphabet Inc), Microsoft Corp., Amazon.com Inc. and Starbucks Corp.(>> Starbucks Corporation) are on tap.

Economic docket:Initial jobless claims jumped by 14,000 to 257,000, a one-month high, though the increase appeared largely concentrated in New York state.

The trade gap in goods--services are excluded --widened to $64.8 billion in March from $63.9 billion in February.

New orders for U.S. durable goods rose 0.7% in March to mark the third straight gain, though demand was inflated by new bookings for fighter planes and passenger aircraft.

Central banks in focus: Earlier Thursday, the Bank of Japan as expected left its ultra-accommodative monetary policy unchanged and offered a more upbeat tone on the country's economy.

Meanwhile, the European Central Bank kept its monetary policy unchanged and re-emphasized that it could increase the size or lengthen the duration of its EUR60 billion-euros-a-month asset-purchase program if inflation looks set to fall back below its target of near but just below 2%.

Check out:ECB live blog: Mario Draghi sees diminished downside risks (http://blogs.marketwatch.com/thetell/2017/04/27/ecb-live-blog-mario-draghi-expected-to-avoid-taper-talk/)

Other markets: The Mexican peso and Canadian dollar advanced against the U.S. dollar on Thursday, after the Trump administration backed away from threats to abandon the North American Free Trade Agreement .

Stocks in Asia ended mixed as investors digested Trump's tax plan. European stocks were lower after the ECB announcement. Oil prices dropped more than 2%, with crude oil moving further below the $50 mark.

Gold was slightly higher, while the ICE Dollar Index was little changed.

--Sara Sjolin contributed to this article.

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