S&P 500, Nasdaq down with data, geopolitics offsetting strong bank results

Weak consumer sentiment data and Middle East conflict soured investors on riskier bets resulting in Nasdaq and S&P 500 closing in red even though several large US banks reported increased quarterly earnings. The three major indices of Wall Street opened higher but lost ground after a preliminary reading on US consumer sentiment showed a sharp fall in October.

Investors were also monitoring Middle East news for any signs of escalation beyond Israel and Hamas. Israel on Friday said that it carried out raids inside the Gaza Strip, its first announcement of a shift to ground operations aimed at Hamas fighters after their deadly rampage in Israel. The United Nations said Israel's call for Gaza civilians to leave was impossible "without devastating humanitarian consequences."

US Treasury prices rose as investors looked for safety while the price of US crude oil rose more than 5 per cent.

“This signals more of a risk off-sentiment,” Lauren Goodwin, economist and portfolio strategist at New York Life Investments told Reuters. She cited the moves in Treasuries, equities and oil. Goodwin also pointed out the deteriorating consumer sentiment and worries about the global economy as well as geopolitical concerns.

At this stage of the economic cycle when data has been good but is "expected to deteriorate over the next several months," Goodwin said, "shifts in leadership are incredibly common and no one market narrative tends to last for more than a couple of days at a time."

Unless there is a major escalation in the Middle East war the strategist said she did not expect Friday's mood to be "indicative of the beginning of a troubled market."

On Friday, at close, the Dow Jones Industrial Average rose 15.39 points, or 0.05 per cent, to 33,646.53, the S&P 500 lost 24.36 points, or 0.56 per cent, to 4,325.25 and the Nasdaq Composite dropped 168.21 points, or 1.24 per cent, to 13,406.01.

The S&P 500 and the Dow were on track for weekly gains. Energy shares were up by 2.7 per cent in line with oil prices, and became the leader among S&P's 11 major industry sectors. Defensive sectors such as utilities were also top gainers.

Other safe-haven assets such as gold rallied. Higher interest rates helped the shares in JPMorgan Chase, Wells Fargo and Citigroup rose after their quarterly profits trounced analysts' estimates.

But even the S&P 500 Banks index pared gains as the session wore on, last up 0.8 per cent after rising as much as 3.4 per cent to a three-week high.

Federal Reserve Bank of Philadelphia President Patrick Harker said he believes the central bank is likely done with its rate-hiking cycle as price pressures have eased.

Among individual stocks, asset manager BlackRock dipped 1.6 per cent after posting a sharp drop in third-quarter net inflows.

UnitedHealth advanced 2.5 per cent after beating third-quarter profit estimates.

Dollar General added 8 per cent after the discount store retailer brought back former CEO Todd Vasos to replace Chief Executive Jeff Owen.

Boeing shed 3 per cent after the planemaker and Spirit AeroSystems expanded the scope of their ongoing inspections of a production defect affecting 737 Max 8 aircraft. Spirit's shares were down less than 1 per cent.

Declining issues outnumbered advancing ones on the NYSE by a 1.60-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored decliners.

The S&P 500 posted 11 new 52-week highs and 19 new lows; the Nasdaq Composite recorded 27 new highs and 302 new lows.

(With Reuters inputs.)