Doubts about the future of tax reform continued to linger on Friday, but stocks pared opening losses in the afternoon to leave the major U.S. indices little changed. The S&P 500 and the Dow finished with modest losses of 0.1% and 0.2%, respectively, while the Nasdaq closed just a tick above its unchanged mark.

The Senate's version of a tax reform bill, which was released on Thursday, has created some doubts in the market about the GOP's ability to implement a tax overhaul as it differs from the House's version of a tax reform bill in several key areas--most notably, the Senate's version calls for delaying a cut in the corporate tax rate by one year.

However, it's tough to say that the Senate's tax reform proposal did little more than give investors an excuse to take some profits following yet another string of record highs. One thing is clear, if investors are concerned about the prospect of tax reform, it didn't impact the equity market significantly this week as the S&P 500 finished with a weekly loss of just 0.2%.

On the whole, Friday's session was pretty uneventful. Many banks were closed in honor of Veterans Day, leading to slightly below-average trading volume.

The S&P 500's energy sector (-0.8%) ended the week on a down note as the price of crude oil declined 0.7% to $56.75/bbl. Health care shares also underperformed, sending the health care group lower by 0.9%, but most of the other sectors finished roughly in line with, or above, the broader market.

Pharmacy retailers like CVS Health (CVS 70.99, +1.97) and Walgreens Boot Alliance (WBA 70.99, +1.85) helped push the consumer staples group (+1.0%) to the top of the sector standings, adding 2.9% and 2.7%, respectively, while department store retailer J.C. Penney (JCP 3.17, +0.42) spiked 15.3% after reporting better-than-expected earnings and revenues for its fiscal third quarter.

In other earnings news, chipmaker NVIDIA (NVDA 216.14, +10.82) climbed 5.3%, hitting a new all-time high, after reporting better-than-expected earnings and revenues and issuing above-consensus revenue guidance for the fourth quarter. Meanwhile, Dow component Walt Disney (DIS 104.78, +2.10) added 2.1% despite missing profit and sales estimates. 

U.S. Treasuries finished on a broadly lower note, erasing their gains from earlier in the week. The yield on the benchmark 10-yr Treasury note jumped seven basis points to 2.40%--settling near a two-week high--while the 2-yr yield climbed three basis points to 1.66%. Yields move inversely to prices.

Elsewhere, stocks in the Asia-Pacific region ended Friday on a mixed note, with Japan's Nikkei (-0.8%) showing relative weakness, while the Euro Stoxx 50 dropped 0.5%.

Reviewing Friday's economic data, which was limited to the University of Michigan Consumer Sentiment Index for November:

• The preliminary reading of the University of Michigan Consumer Sentiment Index for November declined to 97.8 (Briefing.com consensus 100.5) from 100.7 in October.
  • The key takeaway from the report is that consumers' anticipated wage gains recorded the highest two-month level in a decade.

On Monday, investors will receive just one economic report--the October Treasury Budget--which will be released at 14:00 ET.

• Nasdaq Composite +25.4% YTD
• Dow Jones Industrial Average +18.5% YTD
• S&P 500 +15.3% YTD
• Russell 2000 +8.7% YTD

Week In Review: A Taxing Release

Stocks got off to a good start this week, hitting new record highs on Monday and Wednesday, but retraced their gains in the latter half--a move that was nominally attributed to the release of the Senate's tax reform bill. More likely, however, this week's loss was the result of some profit taking following a largely uninterrupted two-month rally.

The financial sector paced this week's retreat, which is fitting considering the group played a leadership role in the market's most recent bullish run; the financial sector jumped 11.4% from September 8 to November 3, while the benchmark S&P 500 added 5.1%. Dow components JPMorgan Chase (JPM) and Goldman Sachs (GS) lost 3.9% and 1.7% this week, respectively.

Industrial shares also struggled, with transports showing particular weakness; the Dow Jones Transportation Average dropped 2.6%.

Meanwhile, the energy sector outperformed, finishing with a gain of 1.1%. The group benefited from an increase in the price of crude oil, which touched its highest level in more than two years; WTI crude futures finished higher by 2.0% at $56.75/bbl. Heightened tensions in the Middle East, which could potentially disrupt crude production in the region, were largely credited for the move.

Saudi Arabia's Crown Prince Mohammad bin Salman ordered the arrests of some of the country's most prominent political and business figures on allegations of corruption. In addition, Saudi Arabia ordered its citizens to leave Lebanon after accusing the country of declaring war, citing the presence of Iranian-backed Hezbollah members within the Lebanon government.

Back in the U.S., earnings season continued this week--albeit with fewer notable companies on the docket--but headlines were focused on M&A developments. Sprint (S) and T-Mobile US (TMUS) lost 7.2% and 3.6%, respectively, after announcing over the weekend that they could not reach a merger agreement.

Meanwhile, chipmaker Broadcom (AVGO) slipped 3.2% after bidding $70 per share (in cash and stock) for Qualcomm (QCOM), which, conversely, ended the week higher by 4.5%. There were also reports that the Department of Justice would require the sale of CNN before it would approve AT&T's (T) acquisition of Time Warner (TWX), but later reports said that claim was false.

Also of note, Walt Disney (DIS) and 21st Century Fox (FOXA) were reportedly in discussions regarding a sale of assets to Disney from Fox in recent weeks.

On the political front, the Senate on Thursday released its version of a tax reform bill, which called for delaying a cut in the corporate tax rate to 20% from 35% by one year and differed from the version that the House unveiled last week in several other key areas--including deductions related to state and local property taxes.

The two chambers will have to hammer out those differences in order to put the bill on the president's desk for approval, and uncertainty surrounding Congress' ability to do just that were cited by some as the main catalyst for Wall Street's weakness in the latter half of the week.

Following this week's events, investors still strongly believe that the Fed will raise rates next month, with the CME FedWatch Tool placing the chances of a December rate hike at 100.0%.