Investors continued to focus on company earnings reports. They're searching for a clearer picture on the impact that the trade war between the U.S. and China is having on corporate profits and the broader economy.
"To some extent, the bleeding's stopped, but now you need to figure out how healthy the patient is," said Willie Delwiche, investment strategist at Baird. "Earnings help with that, and economic data that we receive over the next couple of months will help with that."
The S&P 500 index fell 11.75 points, or 0.4%, to 2,986.20. The index is just 1.3% below its all-time high set in late July. The Dow Jones Industrial Average dropped 255.68 points, or 1%, to 26,770.20. The Nasdaq lost 67.31 points, or 0.8%, to 8,089.54. The Russell 2000 index of smaller stocks gave up 6.36 points, or 0.4%, to 1,535.48.
All told, the S&P 500 ended the week with a gain of 0.5%. Last week, it notched a 0.6% gain. Smaller stocks outpaced the broader market, a sign that investors are growing more confident. The Russell 2000 ended the week 1.6% higher after rising 0.8% last week.
Bond prices were little changed Friday. The yield on the 10-year Treasury held steady at 1.75%. While trading turned choppy this week, investors mostly applauded companies' results so far, including those from JPMorgan Chase, UnitedHealth Group and railroad operator Kansas City Southern.
That helped investors temporarily brush aside worries over the U.S.-China trade conflict. The early round of mostly good results could also help calm investors' fears about another dismal forecast for earnings growth.
Analysts expect profit to contract by nearly 5% for companies within the S&P 500, according to FactSet. Still, forecasts for declines in the first and second quarters were tempered as reporting progressed and companies finished those earnings seasons with tiny contractions instead.
The bar for topping earnings forecasts in the third quarter has been lowered enough that most companies should beat it, Delwiche said. "The question is what happens with 2020 earnings," he said. "You still have robust 2020 numbers out there. Those likely need to come down."
Uncertainty over the trade war and signs of a slowing global economy have roiled markets this year. Washington and Beijing reached a truce last week that kept their conflict from escalating further, but both sides still have many issues to work out before reaching a substantive deal.
Chipmakers helped pull technology sector stocks lower Friday. Micron Technology dropped 4.5% and Nvidia fell 2%. Communication services stocks also accounted for a big slice of the selling. Netflix led the slide, tumbling 6.2%.
Boeing led industrial sector stocks lower following news that the aircraft manufacturer waited months to disclose troubling internal communications between two of its employees about the company's now-grounded 737 Max jet. Boeing lost 6.8%.
Shares in several companies rose after they reported solid quarterly results. ETrade Financial climbed 4.6% after reporting surprisingly good third-quarter profit. Coca-Cola gained 1.8% after the company edged out Wall Street's third-quarter revenue forecasts on improved sales of Coca-Cola Zero Sugar and other drinks.
Meanwhile, Johnson & Johnson fell 6.2% after the company said it is recalling a single lot of its baby powder because a test found trace amounts of asbestos in one bottle. Investors are in for another busy week of corporate earnings next week, including McDonald's on Tuesday, Boeing and Microsoft on Wednesday, and Amazon and American Airlines Group on Thursday.
Benchmark crude oil fell 15 cents to settle at $53.78 a barrel Friday. Brent crude oil, the international standard, dropped 49 cents to close at $59.42 a barrel. Wholesale gasoline was unchanged at $1.62 per gallon. Heating oil was unchanged at $1.95 per gallon. Natural gas was unchanged at $2.32 per 1,000 cubic feet.
Gold fell $4.10 to $1,488.20 per ounce, silver fell 4 cents to $17.50 per ounce and copper rose 4 cents to $2.63 per pound. The dollar fell to 108.46 Japanese yen from 108.68 yen on Thursday. The euro strengthened to $1.1163 from $1.1124.
Stock indexes in Europe closed broadly lower ahead of a weekend vote by Britain's Parliament on the latest proposed deal covering its exit from the European Union. Britain is set to leave the trading block on Oct. 31.
AP Business Writer Damian J. Troise contributed.