S&P 500 stock index drops despite strong earnings from P&G

Yet recent jitters regarding interest rates, trade and geopolitical issues in Italy and Saudi Arabia, which have weighed U.S. stocks this week, persisted.

The U.S. benchmark S&P 500 stock index edged lower on Friday as strong earnings from Procter & Gamble Co were balanced by ongoing concerns about rising interest rates and geopolitical tensions denting U.S. economic growth.

Shares of Procter & Gamble jumped 8.3 per cent after the consumer goods company reported a surprise rise in first-quarter sales. Procter & Gamble was one of the top boosts to the S&P 500, and its rise helped advance the S&P 500 consumer staples index 2.3 per cent.

The sector, which has underperformed the broader S&P 500 this year, was set for its biggest daily percentage gain in more than two years.

"When companies like (Procter & Gamble) give good earnings and provide good guidance, that's a good thing for the market overall," said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

Yet recent jitters regarding interest rates, trade and geopolitical issues in Italy and Saudi Arabia, which have weighed U.S. stocks this week, persisted.

The benchmark S&P 500 index slid below its 200-day moving average, a key statistical indicator of long-term price trends. Defensive sectors - utilities and real estate in addition to consumer staples - led the S&P in percentage gains, signalling caution among investors.

"There a lot of cross-currents right now, with Italy, housing weakness, interest rates," said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

U.S. home sales fell in September by the most in over two years as the housing market continued to struggle despite strength across the broader economy. Home sales have now fallen for six straight months.

The Dow Jones Industrial Average rose 39.47 points, or 0.16 per cent, to 25,418.92, the S&P 500 lost 2.59 points, or 0.09 per cent, to 2,766.19 and the Nasdaq Composite dropped 40.27 points, or 0.54 per cent, to 7,444.87.

Shares of PayPal Holdings Inc climbed 8.6 per cent, on track for their highest one-day percentage gain in two years, after the payments company beat quarterly profit estimates.

However, shares of Honeywell International Inc erased earlier gains to trade 0.8 per cent lower as the industrial conglomerate said it was seeing slower growth in China and that trade tariffs would potentially cost it "hundreds of millions" of dollars in 2019.

Earnings for S&P 500 companies are expected to increase 22.2 per cent year-over-year for the third quarter, according to Refinitiv data. Of the 84 companies that have reported earnings so far, 78.6 per cent have beaten expectations.

Declining issues outnumbered advancing ones on the NYSE by a 1.22-to-1 ratio; on Nasdaq, a 2.18-to-1 ratio favoured decliners.

The S&P 500 posted eight new 52-week highs and 37 new lows; the Nasdaq Composite recorded 11 new highs and 187 new lows. 

(With inputs from agencies.)