The Nasdaq advanced, led by Amazon, while the S&P 500 and the Dow Jones Industrial Average lost ground.
The S&P 500 fell 0.5 per cent to close at 4,117.37 on Friday and is now 10.3 per cent below its July 31 high of 4,588.96. That marks its 10th loss in the last 12 days.
The Dow Jones Industrial Average declined 1.1 per cent to 32,417.59.
The Nasdaq was the lone bright spot in the market, gaining on the strength of big technology companies that reported good earnings. The index rose 0.4 per cent to 12,643.01.
“We didn’t get much of a bump from earnings season this week, which has been quite mixed and not particularly well-received,” said Craig Erlam, senior market analyst for UK and Europe, Middle East and Africa at Oanda.
“Tech is once more the outlier, with the Nasdaq posting near 1 per cent gains while most other indices sit in the red, buoyed by Amazon’s results.”
Stocks have fallen in the past three months as investors face the prospect of “higher for longer” interest rates, and rising yields on US Treasuries on worries about a hawkish Federal Reserve.
Markets are also concerned about an escalation of tensions in the Middle East, as well as a less than impressive corporate earnings season.
More than two-thirds of stocks for companies in the S&P 500 index are trading below their 200-day moving averages, according to an analysis by Bloomberg Intelligence.
Friday marked the end of a busy earnings week, during which nearly one-third of the companies in the S&P 500 posted third-quarter results, Reuters reported.
As of Friday, the season had essentially reached the halfway point, with 245 of the companies in the S&P 500 having reported. Of those, 78 per cent delivered consensus-beating earnings, according to Reuters.
Shares of Amazon rose nearly 7 per cent after beating sales estimates, while Intel jumped more than 9 per cent after the chip maker reported much stronger profit for the summer than analysts expected.
“The Nasdaq is higher after impressive earnings from Amazon, which showed their cloud business is headed in the right direction,” according to Edward Moya, senior market analyst for The Americas at Oanda.
“Amazon’s strong earnings come alongside cost-cutting measures that have been in place over the past year. The key for mega-cap tech is to have strong cloud-unit sales and Amazon was able to deliver.”
However, many big companies slipped after reporting disappointing earnings for their latest quarters.
Chevron fell 6.7 per cent after the oil major reported a drop in third-quarter profit. Exxon Mobil fell 1.9 per cent after reporting a bigger drop in profits than analysts expected. Ford declined 12.2 per cent after disappointing earnings and revenue.
Meanwhile, the US Personal Consumption Expenditures (PCE) price index, which the Federal Reserve uses as a key measure of inflation, increased 0.3 per cent in September.
Core PCE peaked around 5.6 per cent in early 2022 and has been mostly declining since then, though it is still above the Fed’s 2 per cent annual target.
“Any chance of a dovish hold by the Fed went out the window after core PCE posted its largest gain in four months,” Mr Moya said.
“September data confirmed what everyone on Wall Street knows … The economy peaked at the end of the third quarter. Americans posted robust spending numbers in September, a monthly gain of 0.7 per cent, but that coincided with the personal saving rate falling to the lowest level since March 2022.”
“Personal incomes also rose at a softer pace, which eventually will lead to softer spending habits.”
The US economic resilient story was always going to complicate the disinflation process, as robust demand will be supportive for pricing pressures, Mr Moya said.
Despite the small upside surprise with the PCE deflator, expectations are still strong for inflation to continue to soften in October, he added.
Wall Street expects the Fed to leave its key interest rate unchanged at its November policy meeting.
The Fed has increased its main interest rate above 5.25 per cent to its highest level since 2001 in hopes of reining in inflation.
Meanwhile, the yield on the 10-year Treasury held steady at 4.84 per cent.
Oil prices rose amid fears of an escalation of conflict in the Middle East, which could disrupt crude supplies.
US crude rose to $85.15 per barrel and Brent was at $90.12.
“What we’ve seen this week hasn’t seemingly caused much concern, but it’s also occurred at a time when there’s a lot of focus on the growth outlook and the downside risks to it. So that may well be weighing on crude prices at the same time,” Mr Erlam said.
Rising Middle East tensions should provide some underlying support for bullion, Mr Moya pointed out.
He added that gold seems likely to make a return above the $2,000 level given “too much geopolitical angst”.